When real GDP declines in a particular year, nominal GDP:
A)will decline at a faster rate than real GDP if there is inflation.
B)will decline at a slower rate than real GDP if there is inflation.
C)may increase or decrease if there is inflation.
D)will increase if there is deflation.

Question

When real GDP declines in a particular year, nominal GDP:
A)​will decline at a faster rate than real GDP if there is inflation.
B)​will decline at a slower rate than real GDP if there is inflation.
C)​may increase or decrease if there is inflation.
D)​will increase if there is deflation.

Quizplus · Accepted Answer

Nominal GDP may increase or decrease if there is inflation because it is not adjusted for price changes, so inflation can cause nominal GDP to rise even if real GDP declines.

When Real GDP Declines in a Particular Year, Nominal GDP