Asked by DeAnna Schmidt on May 17, 2024

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If real GDP falls from one period to another,we can conclude that

A) deflation occurred.
B) inflation occurred.
C) nominal GDP fell.
D) None of the choices are correct.

Real GDP

Gross Domestic Product adjusted for inflation, measuring the value of goods and services produced in an economy in real terms.

Nominal GDP

The market value of all final goods and services produced within a country in a year, measured using current prices without adjusting for inflation.

  • Compare and contrast nominal GDP, real GDP, and the GDP deflator.
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Verified Answer

KF
Karleigh FosterMay 23, 2024
Final Answer :
D
Explanation :
Real GDP measures the value of all final goods and services produced within a country in a given period, adjusted for inflation. A fall in real GDP indicates a decrease in the total output of the economy, but it does not directly imply anything about inflation (increase in prices) or deflation (decrease in prices). Nominal GDP can fall, rise, or stay the same when real GDP falls, depending on the movement of prices. Therefore, none of the provided choices correctly follow from a fall in real GDP.