If nominal GDP in 2005 exceeds nominal GDP in 2004, then the production of output ?
Correct answer: D. may have risen fallen, or stayed the same because there is not enough information to determine what happened to real output
- A. must have fallen
- B. must have risen
- C. must have stayed the same
- D. may have risen fallen, or stayed the same because there is not enough information to determine what happened to real output
Explanation
Nominal GDP reflects both quantities and prices, so a rise in it does not reveal what happened to real output. Production may have risen, fallen, or stayed unchanged if prices moved accordingly.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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