Final answer:
Nominal GDP can be higher than real GDP due to unemployment and deflation.
Step-by-step explanation:
In economics, nominal GDP refers to the total value of goods and services produced in an economy, measured at current market prices. Real GDP, on the other hand, is adjusted for inflation and is measured at constant prices.
Unemployment and deflation can cause nominal GDP to be higher than real GDP. If there is unemployment or a decrease in prices (deflation), the total value of goods and services produced at the current market prices may be higher because fewer people are employed or prices have decreased.
For example, in a situation where there is high unemployment, the total value of goods and services produced might be higher at the current market prices but would be lower when adjusted for inflation to constant prices (real GDP).
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