Which of the following is correct?
A)Nominal GDP is always less than real GDP.
B)Nominal GDP is always greater than real GDP.
C)Nominal GDP equals real GDP in the base year.
D)Nominal GDP equals real GDP in all years but the base year.

Question

Quizplus · Accepted Answer

Nominal GDP is calculated using current prices, while real GDP is adjusted for inflation using constant prices. Therefore, in the base year, when current prices and constant prices are the same, nominal GDP and real GDP will be equal. However, in all other years, when prices have changed, nominal GDP will differ from real GDP.

Which of the Following Is Correct