Question

An increase in nominal gdp could result from an increase in

i. production.
ii. prices.
iii. subsidies.
group of answer choices
a. i, ii, and iii
b. i and iii
c. i only ii
d.only i and ii

Answer 1

Increases in nominal GDP can result from a rise in production or prices. Subsidies may indirectly affect GDP by altering production costs, not directly.

Step-by-step explanation:

An increase in nominal GDP can occur due to various factors. Two of the most common factors are an increase in production and an increase in prices. When production increases, this means more goods and services are being produced and sold, which directly raises the GDP figure. On the other hand, when prices increase, even without a change in the quantity of goods and services produced, the nominal GDP also rises due to the higher value of these goods and services. However, the role of subsidies is slightly more complex. Subsidies on their own do not directly increase the nominal GDP; they can reduce costs for businesses, which might allow them to lower prices or increase output, but it's the subsequent effect on production or prices that would impact GDP, not the subsidies themselves.