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
In the calculation of GDP by Expenditure method, what should be added from the following:
(A) Private Final Consumption expenditure
(B) Investment Expenditure
(C) Net imports
(D) Net exports
(E) Government Final Consumption Expenditure
Choose the correct answer from the options given below:
Fill in the blanks:
In a modern economy, money comprises of _______ and _______.
Which of the following makes the workers highly vulnerable?
If Marginal Propensity to Consume (MPC) is 4 times the value of the Marginal Propensity to Save (MPS), determine the value of MPC:
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
