A nation's real GDP will increase by increasing the following, except:

Question

Quizplus · Accepted Answer

Increasing the average price level will not increase a nation's real GDP. Real GDP measures the production of goods and services in the economy adjusted for inflation, so increasing the price level without corresponding increases in production does not increase real GDP. In fact, it may decrease it if inflation starts to undermine consumer purchasing power and confidence. A, B, and C will all lead to an increase in real GDP by increasing either the quantity or quality of goods and services produced.

A Nation's Real GDP Will Increase by Increasing the Following