Nominal GDP is not used to determine recessions because inflation can disguise the occurrence of recessions.
Inflation can make it seem like production is rising when it is not.

Question

Quizplus · Accepted Answer

Nominal GDP does not take inflation into account, so it can be misleading when trying to determine if there is actual growth in an economy. Inflation can cause prices to rise, leading to an increase in nominal GDP even if there is no real growth in production. Therefore, real GDP, which adjusts for inflation, is a better measure to use when determining recessions.

Nominal GDP Is Not Used to Determine Recessions Because Inflation