Is it possible for a country's nominal GDP to increase and real GDP to decrease from one year to the next?
A) Yes; this would indicate a larger rise in prices relative to a decrease in output
B) No; because prices are held constant, this would be mathematically impossible
C) Yes; this would indicate a larger rise in output relative to a decrease in prices
D) No; because output is held constant, this would be mathematically impossible

Question

Quizplus · Accepted Answer

Nominal GDP is calculated using current market prices, while real GDP is adjusted for inflation. If nominal GDP increases while real GDP decreases, this indicates that prices have risen more significantly than output has decreased, resulting in a higher nominal value but a lower real value.

Is It Possible for a Country's Nominal GDP to Increase