If the nominal GDP rises by 6 percent and the price level rises by 3 percent, then the real GDP ________ by ________ percent.
A) falls; 3
B) rises; 9
C) rises; 3
D) falls; 9
E) None of these answers is correct.

Question

Quizplus · Accepted Answer

Real GDP is calculated by dividing nominal GDP by the price level (GDP = nominal GDP / price level). Therefore, if the nominal GDP increases by 6% and the price level increases by 3%, the real GDP will increase by (6% - 3%) = 3%.

If the Nominal GDP Rises by 6 Percent and the Price