When we try to measure real GDP and the price level,if we underestimate the growth in real GDP,we will
A) always underestimate the rate of inflation.
B) sometimes underestimate the rate of inflation.
C) always overestimate the rate of inflation.
D) sometimes overestimate the rate of inflation.

Question

Quizplus · Accepted Answer

If real GDP growth is underestimated, it implies that the economy is producing more than measured, leading to an overestimation of inflation since the price level increase appears larger relative to the underestimated output growth.

When We Try to Measure Real GDP and the Price