How do the calculated values for inflation, the real GDP growth rate and nominal GDP growth...
How do the calculated values for inflation, the real GDP growth rate and nominal GDP growth rate relate to each other?
A. They are related in that the growth rate in real GDP plus inflation rate equals (approximately) the growth rate in nominal GDP.
B.They are related in that the growth rate in real GDP minus inflation rate equals (approximately) the growth rate in nominal GDP.
C.They are related in that the growth rate in nominal GDP plus inflation rate equals (approximately) the growth rate in real GDP.
D.Inflation, the real GDP growth rate and nominal GDP growth rate are not directly related to each other.
Homework Answers
Answer : The answer is option A.
The growth rate of real GDP and nominal GDP and inflation rate are related with each other. From economic theory we get that,
Growth rate of Nominal GDP = Growth rate of Real GDP + Inflation rate.
Therefore, option A is correct.
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