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True or false: An increase in nominal GDP will always result in increases in real GDP.  Increases in a positive GDP gap are associated with increases in the unemployment rate.

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It is false to say that an increase in nominal GDP will always lead to a rise in the real GDP. The reason for this outcome is that inflation rates affect the real GDP, not the quantity produced. Thus, it's possible to have a scenario where the nominal GDP has increased, but the real GDP hasn't changed or is lower. For example, the quantity of corn produced this year might be higher than last year. However, the selling price of corn can also be higher this year. It means that you can buy less corn at the current price than you did last year. Hence, the real GDP might lessen due to a decrease in household spending.

It is false to say...

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