Whenever there is inflation,the increase in nominal GDP will overstate growth in the economy.

Question

Quizplus · Accepted Answer

Inflation causes prices of goods and services to increase, which leads to an increase in nominal GDP as it measures the total value of goods and services produced at current prices. However, this increase in nominal GDP does not necessarily indicate real growth in the economy, as it may be due to the rise in prices, rather than an increase in the quantity or quality of goods and services produced. Therefore, the increase in nominal GDP overstated the growth in the economy during inflation.

Whenever There Is Inflation,the Increase in Nominal GDP Will Overstate