If a country's real GDP increases from one year to the next, we can conclude the country experienced:
A) inflation and no change in output.
B) an increase in output and no change in prices.
C) a definite increase in output, and may have experienced an increase in prices.
D) definite inflation, and may have experienced an increase in output.

Question

Quizplus · Accepted Answer

Real GDP is adjusted for inflation and reflects the actual increase in goods and services produced in the economy. Therefore, an increase in real GDP indicates a definite increase in output, and it may or may not be accompanied by an increase in prices.

If a Country's Real GDP Increases from One Year to the Next