Suppose That the Nominal Value of GDP Increased by Approximately

Multiple Choice

Suppose that the nominal value of GDP increased by approximately 2 percent during a given year, but real GDP decreased by 3 percent. Which of the following best explains these events?

A) The money supply decreased by approximately 5 percent.
B) Prices fell by approximately 5 percent.
C) Prices increased by approximately 5 percent.
D) The real productive capacity of the economy increased by approximately 5 percent.