If Nominal GDP Increases 4 Percent During a Year, and Real

question 89

Multiple Choice

If nominal GDP increases 4 percent during a year, and real GDP increases 7 percent during the same year, which of the following must by true?

• A) The total value of GDP must have increased 11 percent during the year.
• B) The general level of prices as measured by the GDP deflator decreased by approximately 3 percent during the year.
• C) The general level of prices as measured by the GDP deflator increased by approximately 3 percent during the year.
• D) Imports must have been about 3 percent larger than exports during the year.