What impact will a rising price level have on real GDP?
A) Real GDP will fall.
B) Real GDP will rise.
C) Real GDP will fall and then rise.
D) Changes in the price level do not impact real GDP.

Question

Quizplus · Accepted Answer

Real GDP is adjusted for inflation and measures the value of goods and services produced in an economy at constant prices. Therefore, changes in the price level do not impact real GDP, as it reflects the economy's output in physical terms, not nominal terms affected by inflation.

What Impact Will a Rising Price Level Have on Real