The Venezuela example illustrates:
A) that the difference between nominal and real GDP is negligible in most cases.
B) that there is no difference between nominal and real GDP in the real world.
C) the importance of distinguishing between nominal and real GDP.
D) that GNP, rather than GDP, is a better measure of a country's economic activity.

Question

Quizplus · Accepted Answer

The Venezuela example highlights the importance of distinguishing between nominal and real GDP. In Venezuela, nominal GDP skyrocketed due to hyperinflation, but this did not reflect actual economic growth or activity. Real GDP, on the other hand, showed the true decline in the country's economic output. This illustrates the significance of using real GDP to account for inflation and accurately measure economic growth.

The Venezuela Example Illustrates