Real GDP rises when output grows faster than prices

Steps:

• Define real GDP as nominal GDP adjusted for inflation using a price index (Real GDP = Nominal GDP / Price Index).
• Identify that real GDP increases if the numerator (nominal GDP) grows more than the denominator (price level or inflation).
• Evaluate options: A relates to productivity, not directly to real GDP; B affects per capita measures; C matches the adjustment formula; D ignores price changes.
• Confirm C directly causes real GDP growth by outpacing inflation.

Why C is correct:

• By the GDP deflator formula, real GDP rises when nominal GDP growth exceeds inflation, reflecting true output increase.

Why the others are wrong:

• A: Employment growth affects labor input but not the price adjustment for real GDP.
• B: Population growth impacts GDP per capita, not total real GDP.
• D: Nominal GDP can rise solely from inflation without real output growth.

Final answer: C