If nominal GDP rises from one year to the next, then
A) the economy must be producing a larger output of goods and services.
B) prices at which goods and services are sold must be higher.
C) either output, or the general level of prices, or both must be rising.
D) employment and productivity must be rising.

Question

Quizplus · Accepted Answer

Nominal GDP can increase due to an increase in either output or prices, or both. Therefore, it is possible that nominal GDP can rise without necessarily indicating that the economy is producing a larger output of goods and services (choice A) or that employment and productivity must be rising (choice D).

If Nominal GDP Rises from One Year to the Next