If nominal GDP increases this year,then real GDP
A)must decrease.
B)must increase.
C)must not change.
D)could increase,decrease,or not change.
E)could either increase or not change but cannot decrease.

Question

Quizplus · Accepted Answer

Nominal GDP is calculated by using current market prices, while real GDP is adjusted for inflation by using a base year. Therefore, nominal GDP can increase even if the actual output of goods and services in the economy remains the same. Real GDP, on the other hand, reflects actual changes in economic output, so it could increase, decrease, or not change depending on the level of inflation or other factors.

If Nominal GDP Increases This Year,then Real GDP