China’s real GDP increased 6.9 percent in the first quarter of 2017 from a year earlier. Investment grew by 9.2 percent and retail sales by 10.9 percent. In current prices, GDP increased by 11.8 percent from a year earlier. 1. Explain why the growth rate of GDP in current prices does not provide information about how quickly the economy is really growing.

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter20: Economic Growth In The Global Economy
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China’s real GDP increased 6.9 percent in the first quarter of 2017 from a year earlier.
Investment grew by 9.2 percent and retail sales by 10.9 percent. In current prices, GDP
increased by 11.8 percent from a year earlier.

1. Explain why the growth rate of GDP in current prices does not provide information
about how quickly the economy is really growing.

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