I know the answer is not C. Answer Save. One of the limitations of using nominal GDP is when an economy is mired in recession or a period of negative GDP growth. Likewise, if we were comparing the GDP growth between two periods, the nominal GDP growth might overstate the growth if inflation is present. 1 Answer. 2. differencebetween nominal and real GDP may arise because:If nominal GDP rises a). real GDP= GDP at constant prices. Real GDP may either rise or fall if nominal GDP rises. If nominal GDP rises a). Economists use the prices of goods from a base year to act as a reference point when comparing GDP from one year to another. Therefore, nominal GDP will include all of the changes in market prices that have occurred during the current year due to inflation or deflation.Inflation is defined as a rise in the overall price level, and deflation is defined as a fall in the overall price level. All else equal, an increase in household income willincrease the equilibrium quantity and increase the priceAn American firm moves a manufacturing plant from the US to Brazil. D.real GDP must also rise. Real GDP may either rise or fall if nominal GDP rises. Sabre web services 5 . Because it is measured in current prices, growing nominal GDP from year to year might reflect a rise in prices as opposed to growth in the amount of goods and services produced. For example, let's say the current year's nominal GDP output was $2,000,000, while the GDP deflator showed a 1% increase in prices since the base year. Allocative and productive efficiency are conditi view the full answer. Online legalshield start 8 . Interstate vinyl fencing 4 . aproduct.In comparing GDP data over a period of years, a Nominal GDP is the value (at current prices) of all final goods and services produced in an economy in a given time period. From definition, it’s main components are : 1. This implies that the SRAS curve isA likely cause of falling Treasury bond prices might beWhat does the presence of discouraged workers do to the measurements of the unemployment rate?discouraged workers are counted as "out of the labor force," thus the unemployment rate is understated, making the economy look stronger than it isWhen both SRAS and AD increase, what can be known for certain?real GDP rises, but the change in the PL is uncertainWhen nominal GDP is rising, we would expect money demand toincrease as consumers demand more money for transactions, increasing the interest rateHigh levels of consumer wealth and optimism would likely have what changed in the market for loanable funds?Suppose households increase the demand for US treasury bonds as financial assets. B.we can be certain that the price level has risen. 12. What is the change in the money market, the interest rate, and the value of the dollar in foreign currency markets?If households are more optimistic about the future, how would the consumption function be affected?All or total amount of goods and services consumed in an economyGovernment practice of spending more than it takes in from taxes Government borrows money, interest rates increase and discourage or "crowd out" investors from taking out a loanfiscal policy that is the result of deliberate actions by policy makers rather than rulesa fiscal policy action that is triggered by the state of the economythe general term applied to the shares of ownership of a corporationhas intrinsic value because the material it was made with is valuable; golddoes not have intrinsic value and only has value when the government says it is valuable; US dollara formal contract to repay borrowed money with interest at fixed intervalsmoney held for the purpose of making everyday market purchasesthe amount of money demanded as an asset is inversely related to the real interest ratethe value of the dollar relative to foreign currencies is highIf the economy is at full employment, what policy will create the most inflation in the short run?an increase in government spending with no change in taxesThe fractional reserve banking system's ability to create money is lessened ifAll else equal, when the US exports more goods and services,the value of the dollar rises as demand for dollars increase Bosco electric kalispell mt 1 .