If nominal GDP grows by 3% and the GDP deflator grows by 2%,then real GDP must grow by 5%.

Name: If nominal GDP grows by 3% and the GDP deflator grows by 2%,then real GDP must grow by 5%.
Brand: Quizplus
Rating: 4.8 (35 reviews)

Question

Quizplus · Accepted Answer

Real GDP growth is calculated by subtracting the inflation rate (measured by the GDP deflator) from the nominal GDP growth rate. Therefore, if nominal GDP grows by 3% and the GDP deflator grows by 2%, real GDP grows by 1% (3% - 2% = 1%), not 5%.

If Nominal GDP Grows by 3% and the GDP Deflator