ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Nominal GDP and real GDP are always the same in whichever base year has been chosen for calculation.
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Nominal GDP is always a larger number than real GDP.
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Nominal GDP and real GDP may have different levels, but they are always increasing.
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Nominal GDP is a more useful measurement when comparing levels of GDP over time.
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Detailed explanation-1: -The correct answer is (iv) Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
Detailed explanation-2: -Answer and Explanation: The correct answer is (i). Nominal GDP is the aggregate value of all final goods and services at current prices, whereas real GDP is the aggregate value of all final goods and services at constant prices.
Detailed explanation-3: -Nominal Gross Domestic Product (GDP) and Real GDP both quantify the total value of all goods produced in a country in a year. However, real GDP is adjusted for inflation, while nominal GDP isn’t.
Detailed explanation-4: -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.