ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Nominal GDP
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Real GDP
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Either A or B
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None of the above
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Detailed explanation-1: -An increase in nominal GDP means an increase also in economic activity. Since nominal GDP accounts for all final goods and services in an economy at current market prices, growth in this economic measure can be attributed to either an increase in quantity or price.
Detailed explanation-2: -Real Gross Domestic Product (GDP)? 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. Thus, real GDP is almost always slightly lower than its equivalent nominal figure.
Detailed explanation-3: -Nominal GDP is usually higher than real GDP because inflation is typically a positive number. Real GDP accounts for changes in market value and thus narrows the difference between output figures from year to year.