Question

Whenever real GDPLOADING... ​declines, nominal GDPLOADING... must also​ decline."

A. Agree. Both real GDP and nominal GDP decline if price falls and output remains constant.
B. Disagree. Real GDP falls if output falls. Nominal GDP can increase if output falls and prices rise.
C. Agree. Both real GDP and nominal GDP decline if output falls and prices remain constant.
D. Disagree. Real GDP falls if output falls. Nominal GDP can increase if output falls and prices fall.

Answer 1

The correct answer is option B.

Step-by-step explanation:

Real GDP is the inflation-adjusted measure of economic growth. It measures the change in output level at a constant price. It measures changes in economic output.

Nominal GDP measures change in output level based on current prices. It is not an inflation-adjusted measure of economic growth.

Real GDP changes with a change in output level. While nominal GDP can change with change in either output level or price. So it is not necessary that a decline in real GDP is accompanied by a decline in nominal GDP.