Is it possible for a country's nominal GDP to increase and real GDP to decrease from one year to the next?
A) Yes, it would indicate a larger rise in prices relative to a decrease in output.
B) No, since prices are held constant and that would be mathematically impossible.
C) Yes, it would indicate a larger rise in output relative to a decrease in prices.
D) No, since output is held constant and that would be mathematically impossible.

Question

Quizplus · Accepted Answer

Nominal GDP is calculated using current market prices, while real GDP is adjusted for inflation. If nominal GDP increases but real GDP decreases, it would indicate a larger rise in prices relative to a decrease in output. This could occur due to factors such as an increase in import prices, supply chain disruptions, or a decrease in productivity.

Is It Possible for a Country's Nominal GDP to Increase