ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Unemployment is increasing
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The economy is in a recession
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The price level is increasing
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The government is running a budget surplus
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Imports exceed exports
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Detailed explanation-1: -An increase in GDP does not necessarily mean a nation has produced more output; it must be specified whether the GDP in question is nominal or real. An increase in nominal GDP may just mean prices have increased, while an increase in real GDP definitely means output increased.
Detailed explanation-2: -1. An increase in nominal GDP means an increase also in economic activity. Since nominal GDP accounts for all final goods and services in an economy at current market prices, growth in this economic measure can be attributed to either an increase in quantity or price.
Detailed explanation-3: -Calculating the Real Economic Growth Rate This calculation is done by factoring in a GDP deflator. A GDP deflator is the quotient of nominal GDP divided by real GDP divided by 100, so this method is only useful in determining real GDP if the GDP deflator is already known.
Detailed explanation-4: -Why Is Nominal GDP Higher Than Real GDP? Nominal GDP is higher than real GDP because it takes current market prices into consideration. Conversely, real GDP is lower than nominal GDP because it takes market price changes into consideration.