If a country wanted to increase their GDB tenfold, could it just increase salaries by ten, force companies to pay ten times more and spend 10 times more in every field as well ? So that everything is increased proportionally, thus making the GDP grow.

Question

If a country wanted to increase their GDB tenfold, could it just increase salaries by ten, force companies to pay ten times more and spend 10 times more in every field as well ? So that everything is increased proportionally, thus making the GDP grow.

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Answer 1

That’s inflation, and the GDP figured you typically see account for it. “Real” GDP accounts for inflation, and so the Real GDP of your hypothetical country would be completely unchanged.

Except, of course, that in doing this they would create all sort of financial chaos and uncertainty and cause their Real GDP to *plummet*.