AP Macroeconomics Question 237: Answer and Explanation
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4. Suppose real GDP increases. We can conclude without a doubt that
- A. prices are higher.
- B. employment is higher.
- C. production is higher.
- D. prices and/or output is higher.
- E. unemployment is lower.
Correct Answer: C
(C) When real GDP rises it can only be due to more production. Price changes do not affect real GDP. Employment (and therefore unemployment) may or may not change with changes in real GDP.