John was researching the economic growth of a country between 2014 and 2019. Using 2014 as the base year, he calculated a 12 per cent increase for real GDP and a 10 per cent increase for nominal GDP. His results indicate that

Question

Quizplus · Accepted Answer

Real GDP measures the value of goods and services produced adjusted for inflation or deflation, showing the actual increase in production. Nominal GDP measures the value of goods and services produced using current prices, without adjusting for inflation or deflation. A 12% increase in real GDP indicates that the quantity of goods and services produced increased. A smaller increase in nominal GDP (10%) compared to real GDP suggests that prices decreased, because the nominal GDP would have increased more if prices had stayed the same or increased.

John Was Researching the Economic Growth of a Country Between