Refer to the above table. Nominal GDP rises faster than real GDP between years:
A) 1 and 2
B) 2 and 4
C) 4 and 5
D) 5 and 6

Question

Refer to the above table. Nominal GDP rises faster than real GDP between years:
A) 1 and 2 
B) 2 and 4 
C) 4 and 5 
D) 5 and 6

Quizplus · Accepted Answer

Nominal GDP rises faster than real GDP when there is inflation. Between years 2 and 4, the GDP deflator (which measures inflation) increased from 100 to 125, meaning that overall prices rose by 25%. This resulted in nominal GDP increasing by a greater percentage than real GDP, which only increased by 20% during the same time period.

Refer to the Above Table