Question

If real GDP grew by 2% and the inflation rate was 2%, then nominal GDP grew by:

A) 4%.
B) 3%.
C) 2%.
D) 0%.
E) 1%.

Answer 1

If real GDP grew by 2% and the inflation rate was 2%, then nominal GDP grew by 0%.

Step-by-step explanation:

The growth rate of real GDP is equal to the growth rate in nominal GDP minus the inflation rate. In this case, since real GDP grew by 2% and the inflation rate was 2%, we can subtract the inflation rate from the growth rate in nominal GDP to find the growth rate in real GDP. 2% - 2% = 0%. Therefore, nominal GDP grew by 0% in this scenario.