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)

Question

Responses

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
prices of goods and services decreased during the year

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

Answer 1

The difference between nominal GDP growth (4%) and real GDP growth (2.3%) can be accounted for by the fact that prices of goods and services increased during the year.

Nominal GDP reflects the total value of all goods and services produced at current prices, including inflation, while real GDP adjusts for inflation to reflect the true growth in output. The difference in these growth rates suggests that inflation was a factor in the increase in nominal GDP relative to real GDP.