Question

Real GDP equaled $9,191 billion in 2000 and $9,215 billion in 2001. Both figures are adjusted for changes in the value of the dollar using a chained price index with a base year of 1996.

Which of the following could explain the increase in real GDP in 2001?


A. The price level increased.

B. The number of new homes built decreased.

C. Inventories increased.

D. Imports increased.
Which of the following could explain the increase in real GDP in 2001?

(a) The price level increased.
(b) The number of new homes built decreased.
(c) Inventories increased.
(d) Imports increased.
(a) The price level increased.
(b) The number of new homes built decreased.
(c) Inventories increased.
(d) Imports increased.
You failed to state what the problem is asking.
Ignore the previous post.

The answer is c.

a. The GDP is adjusted already, so changes in the price level cannot account for its increase.
b. If the number of new homes built decreased, production decreased, which would lower GDP.
d. If imports increased, GDP would decrease, because GDP increases with net exports.

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