Practice question · Multiple choice
A country’s nominal GDP grew 6% while inflation was 4%. Approximately how fast did real output grow?
Hints
- Nominal growth bundles price rises with output rises.
- Real growth ≈ nominal growth − inflation.
Show the answer
A. About 2%
Why
Real growth ≈ . Two-thirds of the headline number was just prices going up, which is exactly why economists deflate before celebrating.
Practise Macroeconomic Indicators
The app has 8 more questions on this lesson, and keeps your place in the course. Business I is free to start.
More questions on Macroeconomic Indicators
- If many discouraged workers stop looking for jobs, the measured unemployment rate can fall even though no one…
- Order the steps of computing annual inflation with a CPI.
- Sort each person by their labor-market status.
- Two countries have identical GDP per capita, and one has far higher life expectancy and leisure. What does…