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If nominal GDP rises while real GDP remains constant, what can be concluded about welfare?

Answer and explanation

Correct answer: The rise may be due only to prices, so real welfare need not have increased

Nominal GDP uses current prices, while real GDP adjusts for price changes. If nominal GDP rises but real GDP stays constant, the increase may be due to higher prices rather than more output. It therefore does not establish that real welfare increased. B is correct.

Related tags

Nominal GdpReal GdpGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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