If the percent change in the price level is ________ than the percent change in ________ GDP, ________.
A) smaller; nominal; real GDP shrinks
B) greater; nominal; real GDP shrinks
C) greater; real; nominal GDP shrinks
D) greater; real; nominal GDP always stays the same
E) Not enough information is given.

Question

Quizplus · Accepted Answer

When the percent change in the price level is greater than the percent change in nominal GDP, it means that the increase in nominal GDP is largely due to price increases rather than an increase in the quantity of goods and services produced. Therefore, after adjusting for inflation, real GDP (which reflects the actual volume of goods and services produced) would show a decrease, indicating that the economy is not growing in real terms.

If the Percent Change in the Price Level Is ________