Question 9

If the quantity of final goods and services produced decreased, could real GDP increase? If so, how?

a)No, Real GDP measures the value of the economy's output at current year prices; if the quantity of output at the current year's price level decreases so does real GDP.

b)Yes, because real GDP of an economy measures the value of output multiplied by the current year's price level; therefore if prices rise by a greater % that the decrease in quantity, RGDP can increase.

c)No, Real GDP measures the value of the economy's output at constant prices.If quantity decreases so does real GDP.

d)Only if the price level remains constant, real GDP could increase, decrease or stay the same.

Question 10

If the quantity of final goods and services produced decreased could nominal GDP increase? If so, how?

a)Yes, if the percentage (%) increase in the price level is less that the percentage decrease in the quantity of output, nominal GDP can increase.

b)No, nominal GDP measures the value of the economy's output at current prices.If quantity decreases so does nominal GDP.

c)No.the decrease in quantity will outweigh any change in the price level, so nominal GDP will decrease at any given price level.

d)Yes, if the percentage (%) increase in the price level is greater that the percentage decrease in the quantity of output, nominal GDP can increase.