Real GDP is a better measure of economic well-being than nominal GDP, because real GDP:
A) excludes the value of goods and services exported aboard.
B) includes the value of government transfer payments.
C) measures changes in the quantity of goods and services produced by holding prices constant.
D) adjusts the value of goods and services produced for changes in the foreign exchange rate.

Question

Quizplus · Accepted Answer

Real GDP measures changes in the quantity of goods and services produced by holding prices constant, which allows for a more accurate comparison of economic well-being over time. Excluding the value of goods and services exported abroad (A) or including the value of government transfer payments (B) are both factors that can distort the measurement of economic well-being. Real GDP also does not adjust for changes in the foreign exchange rate (D), as it focuses solely on changes in the quantity of goods and services produced.

Real GDP Is a Better Measure of Economic Well-Being Than