Please answer these questions 1- During periods of inflation: A) nominal GDP ris
ID: 1146586 • Letter: P
Question
Please answer these questions1- During periods of inflation: A) nominal GDP rises at the same rate as real GDP. B) norminal GDP rises faster than real GDP C) norminal GDP rises slower than real GDP. D) one cannot infer anything about the relative rates of growth of nominal and real GDP.
2- if the GDP deflator rises while real GDP falls, then norminal GDP: A) must rise B) must fall C) must remain constant D) could rise, fall or remain unchanged Please answer these questions
1- During periods of inflation: A) nominal GDP rises at the same rate as real GDP. B) norminal GDP rises faster than real GDP C) norminal GDP rises slower than real GDP. D) one cannot infer anything about the relative rates of growth of nominal and real GDP.
2- if the GDP deflator rises while real GDP falls, then norminal GDP: A) must rise B) must fall C) must remain constant D) could rise, fall or remain unchanged Please answer these questions
A) nominal GDP rises at the same rate as real GDP. B) norminal GDP rises faster than real GDP C) norminal GDP rises slower than real GDP. D) one cannot infer anything about the relative rates of growth of nominal and real GDP.
2- if the GDP deflator rises while real GDP falls, then norminal GDP: A) must rise B) must fall C) must remain constant D) could rise, fall or remain unchanged
Explanation / Answer
Answer 1 - During the period of inflation market prices rise. Therfore nominal gdp rise faster than real gdp.
Option B is the correct answer
Answer 2 - We know that gdp deflator is equal to nominal gdp over real gdp. Since gdp deflator rises and real gdp is falling then, nominal could fall, rise and remain unchanged.
Option D is the correct answer.