If the price index is rising over a period of time, then the real GDP in years:
A) Prior to the base year will be larger than the nominal GDP
B) Prior to the base year will be less than the nominal GDP
C) After the base year will be higher than the nominal GDP
D) After the base year will be rising faster than the nominal GDP

Question

Quizplus · Accepted Answer

When the price index is rising, it means that prices are increasing. In years prior to the base year, the real GDP will be adjusted for inflation and will be larger than the nominal GDP, which is not adjusted for inflation.

If the Price Index Is Rising Over a Period of Time