If Both Nominal GDP and Real GDP Increase from One

question 109

Multiple Choice

If both nominal GDP and real GDP increase from one year to the next, but the increase in real GDP is smaller than that of nominal GDP, we can conclude that:

• A) prices went up, but output stayed the same.
• B) prices stayed the same, but output went up.
• C) both prices and output went up.
• D) both prices and output stayed the same.

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Definitions:

Negative Externality

A cost that affects a party who did not choose to incur that cost, commonly associated with production or consumption of goods and services.

Government Agency

A government agency is an organization operated by the government to enforce laws, oversee activities, and provide services in a specific area.

Pollution Tax

a tax imposed on the emission of pollutants, intended to provide an economic incentive for businesses and individuals to reduce their environmental impact.

Emissions Reduction

The process or actions that lead to a decrease in the amount of pollutants or greenhouse gases released into the atmosphere.