PRC-3 · Chapter 13 · Question 37 of 50
If a country's Nominal GDP grows by 10% in a year, but the general price level (inflation) also rises by exactly 10%, what has happened to the Real GDP?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) It has remained completely unchanged (0% growth)
Explanation
Real GDP adjusts for inflation. Since the entire 10% rise in nominal value was purely due to higher prices, the actual physical volume of production (Real GDP) did not grow at all.
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