Kansas City produced 5,000 trucks in 2018 and sold each for \( \$ 40,000 \). In 2019, Kansas City produced 5,000 of the exact same truck model and sold them for \( \$ 45,000 \) each. In this scenario, growth in nominal GDP would be_than growth in real GDP because _ GDP uses constant prices. lower; real lower; nominal higher; real

The scenario involves calculating both **nominal GDP** and **real GDP** for Kansas City in 2018 and 2019. 1. **Nominal GDP** calculates the value of goods and services using current prices: - **2018:** \( 5,000 \text{ trucks} \times \$40,000/\text{truck} = \$200,000,000 \) - **2019:** \( 5,000 \text{ trucks} \times \$45,000/\text{truck} = \$225,000,000 \) - **Nominal GDP Growth:** \( \$225,000,000 - \$200,000,000 = \$25,000,000 \) (12.5% increase) 2. **Real GDP** adjusts for price changes by using constant (base-year) prices: - Assuming 2018 as the base year, the price per truck remains \$40,000 for both years. - **2019 Real GDP:** \( 5,000 \text{ trucks} \times \$40,000/\text{truck} = \$200,000,000 \) - **Real GDP Growth:** \( \$200,000,000 - \$200,000,000 = \$0 \) (0% increase) **Conclusion:** - **Nominal GDP** shows an increase because it reflects both the quantity of goods produced and the price at which they are sold. - **Real GDP** remains unchanged as it only accounts for the quantity of goods produced, using constant prices. Therefore, **growth in nominal GDP is higher than growth in real GDP** because **real GDP uses constant prices**. **Answer:** higher; real