Asked by Shyann Sanders on Jun 24, 2024
Verified
If real GDP increases and the price index has increased
A) the percentage increase in GDP must have been less than the percentage increase in the price level.
B) GDP may have either increased or decreased.
C) GDP must have increased.
D) GDP must have fallen.
Real GDP
Real GDP (Gross Domestic Product) represents the total value of all goods and services produced over a specific time period within a country, adjusted for inflation.
Price Index
is a measure that examines the weighted average of prices of a basket of consumer goods and services, used to track inflation or deflation.
GDP
Gross Domestic Product is the sum of the market value of all final goods and services made within a country's borders in a given timeframe.
- Distinguish between real GDP and nominal GDP and understand the effects of inflation and deflation on them.
Verified Answer
TM
Tracey MacDonaldJun 25, 2024
Final Answer :
C
Explanation :
When real GDP increases, it means the total output of goods and services produced in an economy, adjusted for inflation, has increased. This indicates an actual growth in the economy, regardless of changes in the price level.
Learning Objectives
- Distinguish between real GDP and nominal GDP and understand the effects of inflation and deflation on them.