Which of the following is closely related to nominal and normal GDP
when applying monetary policy?
A. income
B. debt
C. inflation

C. inflation

Explanation:

Inflation is a very serious concern when applying monetary policy as it is closely related to nominal and normal GDP. The nominal GDP includes the effects of inflation in the calculation of GDP which has the effect of increasing GDP more than it would if inflation was not included.

This is why the Real GDP exists and is the preferred metrics because in removing the effects of inflation, it allows for proper comparison with other years.

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