ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Nominal GDP includes imports from other countries, Real GDP does not
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Real GDP is adjusted for inflation, nominal is not
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Real GDP represents the current year, nominal represents a base year
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None of the above
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Detailed explanation-1: -Nominal GDP measures output using current prices, while real GDP measures output using constant prices.
Detailed explanation-2: -The main difference between nominal GDP and real GDP is the taking of inflation into account. Since nominal GDP is calculated using current prices, it does not require any adjustments for inflation.
Detailed explanation-3: -Nominal GDP is determined as the price level in the economy times the quantity of final commodities and services produced in the year. The real GDP, on the other hand, is the value of all the final commodities and services adjusted for the changes in the price level (also termed as inflation).
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.