Nominal gross domestic product: Is not affected by the level of inflation Change

Question

Nominal gross domestic product: Is not affected by the level of inflation Changes only when there is a change in output Changes only when there is a change in the price level Can change when there is a change in either output of the price level. Suppose that an economy's output does not change from one year to the next. but the price level doubles. What happens to real GOP? Real GDP doubles Real GDP is halved Real GDP doesn't change There is not enough information to determine what happens to GDP. Suppose that an economy's output does not change from one year to the next. but the price level doubles What happened to nominal GDP? Nominal GDP doubles Nominal GDP is halved Nominal GDP doesn't change There is not enough information to determine what happens to nominal GDP.

Explanation / Answer

(9) (A)

(10) (B)

Real GDP = Nominal GDP / Price level

If price level doubles but nominal GDP is unchanged, real GDP is halved.

(11) (C)

Nominal GDP is measured by a country's output. Since output doesn't change, nominal GDP doesn't change.

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