The difference between nominal GDP and real GDP is that nominal GDP:
A) measures the total value of only final goods and services, whereas real GDP measures the value of all goods and services, both intermediate and final.
B) measures a country's production of final goods and services at current market prices, whereas real GDP measures a country's production of final goods and services at the same prices in all years.
C) is measured in dollar terms, whereas real GDP is measured in terms of numbers of goods and services produced.
D) measures a country's production of final goods and services at fixed prices, whereas real GDP measures a country's production of all final goods and services at current market prices.

Question

Quizplus · Accepted Answer

Nominal GDP measures a country's production of final goods and services at current market prices, which means it includes the effects of inflation. Real GDP, on the other hand, measures a country's production of final goods and services at the same prices in all years, which eliminates the effects of inflation and allows for meaningful comparisons across time.

The Difference Between Nominal GDP and Real GDP Is That