Real GDP is:
A) calculated based on goods and services valued at constant prices.
B) calculated based on goods and services valued at current prices (current at the time of production).
C) useful in clearly seeing changes in prices over time using GDP.
D) the actual GDP that is created in the economy when we consider all items purchased.

Question

Quizplus · Accepted Answer

Real GDP is calculated based on goods and services valued at constant prices, which allows for a more accurate comparison of economic output over time by taking out the effects of inflation. Option B is referring to nominal GDP, which does not account for changes in prices over time and can be distorted by inflation. Option C is incorrect as it is a description of GDP deflator and not real GDP. Option D is incorrect as it is not a clear definition of GDP.

Real GDP Is