Real GDP is calculated in a way such that goods and services are evaluated at some constant set of prices. Since these prices remain fixed, if the Real GDP changes, we can be sure that it is the volume of production which is undergoing changes. Nominal GDP, on the other hand, is simply the value of GDP at the current prevailing prices.
Keeping output constant, nominal GDP increases because?
Prices increase
The correct answer is **Prices increase**.
- **Nominal GDP depends on both output and prices.**
- **If output remains the same but prices rise, nominal GDP increases.**
- **(b) Incorrect** → Prices decreasing would lower nominal GDP.
- **(c) Incorrect** → Decreasing output lowers GDP.
- **(d) Incorrect** → While both factors impact GDP, the question specifies output is constant.
Important Questions from National Income and Related Aggregates
Match List-I with List-II:
List-I List-II (A) ΔC/ΔY (I) APS (B) S/Y (II) MPS (C) ΔS/ΔY (III) APC (D) C/Y (IV) MPC Choose the correct answer:
Central Pollution Control Board (CPCB) has identified ______ categories of large and medium industries as polluting industries.
Match List-I with List-II:
List-I List-II (A) Ex-ante saving (I) Actual Saving (B) Ex-post consumption (II) Planned Saving (C) Ex-ante consumption (III) Planned Consumption (D) Ex-post saving (IV) Actual Consumption Identify the Stock variable/variables:
A. Income
B. Output
C. Capital
D. Profits
E. Money SupplyA firm buys a machine for ₹55 lakhs. The expected life of the machine is ten years. The annual depreciation of the machine is:
