Asked by Heath Gillette on Jun 17, 2024
Verified
GDP will grow faster than real GDP if
A) unemployment occurs in an economy.
B) imports exceed exports in an economy.
C) deflation occurs in an economy.
D) inflation occurs in an economy.
E) cost of production declines.
Real GDP
The measure of the value of all final goods and services produced within a country in a specified period, adjusted for inflation, reflecting the true economic health of a country.
Inflation
The upward trend in the average pricing of goods and services, narrowing the scope of purchasing capacity.
- Identify the distinctions between nominal GDP, real GDP, and the GDP deflator.
Verified Answer
RT
Reyna TinajeroJun 18, 2024
Final Answer :
D
Explanation :
GDP is measured in current prices, which includes the effect of inflation. Therefore, if inflation occurs in an economy, GDP will increase faster than real GDP, which is adjusted for inflation.
Learning Objectives
- Identify the distinctions between nominal GDP, real GDP, and the GDP deflator.