124k views
2 votes
If real GDP in 2016 using 2015 prices is lower than nominal GDP of​ 2016, then

A.prices in 2016 are higher than prices in 2015.
B.prices in 2016 are lower than prices in 2015.
C.real GDP in 2016 is larger than real GDP in 2015.
D.nominal GDP in 2016 equals nominal GDP in 2015.

User Hightow
by
7.1k points

1 Answer

6 votes

Final answer:

If real GDP in 2016 using 2015 prices is lower than nominal GDP of 2016, it means that prices in 2016 are higher than prices in 2015.

Step-by-step explanation:

If real GDP in 2016 using 2015 prices is lower than nominal GDP of 2016, this indicates that the value of goods and services produced in 2016, adjusted for changes in prices, is lower than the value of goods and services produced in 2016 at current prices. This means that prices in 2016 are higher than prices in 2015.

The difference in real GDP and nominal GDP allows economists to measure the impact of changes in prices on economic growth. Real GDP accounts for changes in prices by using a base year (in this case, 2015) to calculate the value of goods and services produced. Nominal GDP, on the other hand, does not account for changes in prices and reflects the current value of goods and services produced.

Therefore, if real GDP in 2016 using 2015 prices is lower than nominal GDP of 2016, it means that prices in 2016 are higher than prices in 2015.

User Yllohy
by
7.7k points