Table 1 shows nominal GDP for the economy of Meridia. The government is monitoring economic growth. Year Nominal GDP ($ billion) 2021 248 2022 260 (a) Calcu...

Assessment: Economics 9214 | Paper 2 Mock 01 | Written Paper 2 Subject: Economics - 9214

Question 1 Report

Table 1 shows nominal GDP for the economy of Meridia. The government is monitoring economic growth.

YearNominal GDP ($ billion)
2021248
2022260

(a) Calculate the increase in nominal GDP between 2021 and 2022. [1]
(b) State why nominal GDP alone may not show whether real output increased. [1]

Answer Details

(a) The increase in nominal GDP is:

\[\$260\text{ billion}-\$248\text{ billion}=\$12\text{ billion}\]

The increase is \(\$12\) billion. [1]

(b) Nominal GDP is measured using current prices. It may rise because prices have increased through inflation, even if the quantity of goods and services produced, real output, has not increased. [1]

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