Assume the table shown displays the total output and prices of the only two goods produced in a small economy. Looking at the changes in real GDP and nominal GDP from 2017 to 2018, because real and nominal GDP increased at the same rate, we can conclude that:
A) there was no change in prices, only output.
B) prices increased
C) only the production of footballs increased.
D) there was no change in output, only prices.

Question

Assume the table shown displays the total output and prices of the only two goods produced in a small economy.  Looking at the changes in real GDP and nominal GDP from 2017 to 2018, because real and nominal GDP increased at the same rate, we can conclude that:
A) there was no change in prices, only output. 
B) prices increased 
C) only the production of footballs increased. 
D) there was no change in output, only prices.

Quizplus · Accepted Answer

Real GDP measures the value of output using constant prices, while nominal GDP measures the value of output using current prices. If real and nominal GDP increase at the same rate, it means there was no change in prices, only output. Therefore, choice A is the correct answer. Choices B, C, and D are incorrect.

Assume the Table Shown Displays the Total Output and Prices