Suppose that in 2012,real GDP is larger than nominal GDP.The GDP price index in 2012 is definitely

Question

Quizplus · Accepted Answer

If real GDP is larger than nominal GDP, this means that the price level is lower in the base year (which is used to calculate real GDP) than in the current year (which is used to calculate nominal GDP). Therefore, the GDP price index in 2012 (the current year) must be greater than 100 in order to reflect the increase in prices since the base year. Therefore, the only choice that makes sense is E - the GDP price index in 2012 must be less than 100.

Suppose That in 2012,real GDP Is Larger Than Nominal GDP