The growth rate of GDP in 2005 was 6.5%, But the growth rate or real GDP was 3.1
ID: 1155105 • Letter: T
Question
The growth rate of GDP in 2005 was 6.5%, But the growth rate or real GDP was 3.1%. Based on these facts alone, we can conclude that A) GDP per capita rose in 2005. B) the average price level was rising in 2005. C) the government increased its spending in 2005. D) the economy experienced disinflation in 2005. The growth rate of GDP in 2005 was 6.5%, But the growth rate or real GDP was 3.1%. Based on these facts alone, we can conclude that A) GDP per capita rose in 2005. B) the average price level was rising in 2005. C) the government increased its spending in 2005. D) the economy experienced disinflation in 2005. A) GDP per capita rose in 2005. B) the average price level was rising in 2005. C) the government increased its spending in 2005. D) the economy experienced disinflation in 2005.Explanation / Answer
Answer is B. The average price level was rising in 2005.
The main factor for change in real GDP as compared to nominal GDP is price level changes. As the real GDP had not increased as per Nominal GDP growth rate, this means the price level has increases much more than the nominal GDP growth rate.
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