To best determine whether an economy's output is growing or shrinking, one must keep track of changes in:

Question

Quizplus · Accepted Answer

Nominal GDP can be misleading as it includes the effects of inflation, whereas real GDP takes inflation into account and gives a more accurate measure of the economy's actual output. Therefore, changes in real GDP provide the best indication of whether an economy's output is growing or shrinking.

To Best Determine Whether an Economy's Output Is Growing or Shrinking