Assume an Economy That Makes Only One Product and That

Multiple Choice

Assume an economy that makes only one product and that year 3 is the base year.Output and price data for a five-year period are as follows.Answer the question on the basis of these data. $\begin{array}{c}\begin{array}{c}\\\underline{\text { Year }} \\1 \\2 \\3 \\4 \\5\end{array}\begin{array}{c}\text { Units of}\\\underline{\text { Output}}\\3 \\4 \\6 \\7 \\8\end{array}\begin{array}{c}\text { Price Per } \\\underline{\text { Unit } }\\ \$ 3 \\4 \\5 \\7 \\8\end{array}\end{array}$
Refer to the data.For the years shown,the growth of:

A) real GDP has exceeded the growth of nominal GDP.
B) nominal GDP accurately reflects changes in real output.
C) nominal GDP overstates increases in real output.
D) nominal GDP understates increases in real output.