uppose the u.s. nominal GDP increases from one year to the next year. Can you conclude that these figures present a misleading measure of economic growth?
uppose the u.s. nominal GDP increases from one year to the next year. Can you conclude that these figures present a misleading measure of economic growth?
Chapter11: Gross Domestic Product
Section: Chapter Questions
Problem 8SQP
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Suppose the u.s. nominal
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Step 1
The nominal GDP is the measure of GDP which is being calculated by multiplying the current year quantity of goods and services produces with the current year price level in the economy. Thus, the nominal GDP includes the inflation in it. The real GDP on the other hand is calculated by multiplying the current year quantity with the base year price level which makes it inflation-free. This is the difference between the nominal and real GDPs of the economy.
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