Suppose the country of Altaria only produces one style of good, pink tutu. Last year, nominal GDP was $50,000 and this year it is $200,000. What can be definitively conclude

Question

Alivia Bartlett

Business

26 March, 23:11

Suppose the country of Altaria only produces one style of good, pink tutu. Last year, nominal GDP was $50,000 and this year it is $200,000. What can be definitively conclude

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Answers (1)

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Jovanni Blevins · Answer 1

None of the above

Explanation:

The missing options are:

Output in Altaria quadrupled The rate of unemployment decreased Standard of living in Altaria increased All of the above None of the above

The only thing that we can be 100% certain is that the monetary value of output in Altaria quadrupled. The nominal GDP measures the total production of new and finished goods and services in a country during a year. It doesn't consider inflation, real GDP does.

In this case, if inflation increased dramatically, say 400%, the output didn't change at all, only the nominal monetary value increased. A rise in inflation would decrease the standard of living in the country. The unemployment rate may or may not have increased.