Question 1 Report
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) 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]
(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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