ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Real GDP is GDP evaluated at the market prices of some base year.

Detailed explanation-2: -Real gross domestic product (GDP) is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year. Real GDP is expressed in base-year prices.

Detailed explanation-3: -Nominal GDP is the total value of all goods and services produced in a given time period, usually quarterly or annually. Real GDP is nominal GDP adjusted for inflation. Real GDP is used to measure the actual growth of production without any distorting effects from inflation.

Detailed explanation-4: -The GDP Deflator tracks price changes in a country’s economy over time. It will take a base year, where nominal GDP equals real GDP, and sets it equal to 100. Any change in price will be reflected in nominal GDP, which will lead to a change in the GDP Deflator.

Detailed explanation-5: -Real GDP is a better indicator of economic growth because it can be compared with base year GDP. While nominal GDP cannot be compared to any previous year’s GDP.