Question

In a given year, nominal GDP grew by approximately 4%
, while real GDP grew by only 2.3%
. This difference can be accounted for by the fact that _____.(1 point)

prices of goods and services increased during the year

net exports were negative during the year

prices of goods and services decreased during the year

net exports were positive during the year

Answer 1

prices of goods and services increased during the year

Explanation: Nominal GDP rises with both output and price changes, while real GDP is adjusted for price changes. The nominal–real gap (~1.7%) reflects inflation.