Can nominal GDP ever be less than real GDP?
What will be an ideal response?
Yes, nominal GDP can be less than real GDP. If prices generally fall from one period to the next, then nominal GDP is less than real GDP. However, in the U.S. economy, because prices generally rise, nominal GDP typically is greater than real GDP (except in the base period.) But, there is no economic law that states that prices must generally rise and so there is no necessity for nominal GDP to be larger than real GDP.
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Indicate whether the statement is true or false
According to your authors, a recessionary "bust" is
A) an inherent part of any market economy. B) a correction of the mistakes generated during the prior expansionary "boom." C) an event that can be successfully recovered through fiscal "stimulus" policies. D) identified by a rise in real GDP.