Suppose real GDP was 100 in year 1 and 105 in year 2. The growth rate of real GDP is:

Refer to the scenario above. Suppose besides consuming all the potatoes grown on his farm, Edwin buys 5 pounds of potatoes at $0.80 per pound. What is likely to happen in this case?

A) GDP will increase by $4. B) GDP will remain unchanged. C) GDP will decrease by $0.80. D) Trade surplus will increase by $4.

Nominal GDP can change

A) only if prices change. B) only if the quantities of goods and services change. C) only if prices increase. D) if either prices or the quantities of goods and services change. E) only if prices and the quantities of the goods and services change.