If the inflation rate is 10% and nominal GDP growth is 8% then real GDP must have
A)increased by 2%.
B)decreased by 18%.
C)decreased by 2%.
D)increased by 18%.

Name: If the inflation rate is 10% and nominal GDP growth is 8% then real GDP must have A)increased by 2%. B)decreased by 18%. C)decreased by 2%. D)increased by 18%.
Brand: Quizplus
Rating: 4.8 (37 reviews)

Question

Quizplus · Accepted Answer

Using the formula for real GDP:
Real GDP = Nominal GDP / (1 + inflation rate/100)
Real GDP = 8 / (1 + 10/100) = 7.27
Therefore, real GDP has decreased by 2%.

If the Inflation Rate Is 10% and Nominal GDP Growth