Nominal GDP differs from real GDP because:
A) Nominal GDP is based on constant prices
B) Real GDP is based on current prices
C) Real GDP results from adjusting for changes in the price level
D) Nominal GDP results from adjusting for changes in the price level

Question

Quizplus · Accepted Answer

Nominal GDP is the value of all final goods and services produced in an economy in a given year, measured in current prices. Real GDP, on the other hand, is a measure of economic output that adjusts for changes in the price level. Real GDP is calculated by taking nominal GDP and adjusting it for inflation or deflation, to give a more accurate picture of changes in output over time. Therefore, the correct answer is C because real GDP is based on current prices and results from adjusting for changes in the price level.

Nominal GDP Differs from Real GDP Because