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In a hypothetical country, Nominal GDP has increased by 5%
. Which of the following must be true?(1 point)
The quantity of economic output has decreased.
The quantity of economic output has increased.
Either price, economic output, or both has increased.
Prices have increased.
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Correct answer: "Either price, economic output, or both has increased."
Explanation: Nominal GDP = (price level) × (quantity of output). A 5% rise in nominal GDP could come from higher prices (inflation), higher real output, or a combination. You cannot deduce that prices alone or quantity alone rose (each could have stayed same or moved in opposite directions).
Explanation: Nominal GDP = (price level) × (quantity of output). A 5% rise in nominal GDP could come from higher prices (inflation), higher real output, or a combination. You cannot deduce that prices alone or quantity alone rose (each could have stayed same or moved in opposite directions).
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