If real GDP in 2016 using 2015 prices is equal to the nominal GDP of 2016, then
A) prices in 2016 are lower than prices in the base year.
B) the price level has not changed.
C) prices in 2016 are higher than prices in the base year.
D) real GDP in 2016 is larger than real GDP in 2015.

Question

Quizplus · Accepted Answer

If the real GDP in 2016 using 2015 prices is equal to the nominal GDP of 2016, it means that the inflation between 2015 and 2016 is zero. Therefore, the price level has not changed, which is option B. Options A and C can be ruled out because they suggest changes in the price level. We cannot infer anything about option D since we do not have any information about real GDP in 2015.

If Real GDP in 2016 Using 2015 Prices Is Equal