Gross Domestic Product Quick Check

Question

4 of 54 of 5 Items
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)
Responses

net exports were positive during the year
net exports were positive during the year

net exports were negative during the year
net exports were negative during the year

prices of goods and services increased during the year
prices of goods and services increased during the year

prices of goods and services decreased during the year

Answer 1

The correct response is:

prices of goods and services increased during the year.

This is because nominal GDP includes the effects of price changes, while real GDP is adjusted for inflation. The difference in growth rates can be attributed to inflation, indicating that prices of goods and services increased during the year.