Which of the following statement is correct?
A)If nominal GDP decreases, then real GDP must increase.
B)If nominal GDP increases, then real GDP must increase.
C)If real GDP decreases, then nominal GDP must decrease.
D)If nominal GDP does not change, then real GDP cannot change.
E)Nominal and real GDP can change either in the same direction or the opposite direction.

Question

Quizplus · Accepted Answer

Nominal and real GDP can change in the same or opposite directions due to changes in price levels. Nominal GDP is affected by both price and quantity changes, while real GDP is adjusted for inflation and reflects only quantity changes.

Which of the Following Statement Is Correct