Real GDP is
A) the nominal value of all ﬁnal goods and services produced in the economy.
B) the nominal value of all ﬁnal goods and services produced in the domestic economy, adjusted for inﬂation or deﬂation.
C) that aggregate output that is produced when the economy is operating at full employment.
D) always greater than nominal GDP.

Question

Quizplus · Accepted Answer

Real GDP is the nominal value of all final goods and services produced in the domestic economy, adjusted for inflation or deflation. This adjustment takes into account changes in the overall price level so that we get a more accurate measure of economic output over time. This differs from nominal GDP, which does not take into account changes in the price level and only measures output in current dollar terms. Real GDP is also not necessarily equal to the maximum output that can be produced at full employment (Choice C). Finally, Real GDP can sometimes be less than nominal GDP (Choice D) if there has been deflation or a decrease in overall prices.

Real GDP Is