What is the difference between nominal GDP and real GDP?
A) There is no difference. They are two terms for the same thing.
B) Nominal GDP is always smaller than real GDP because it does not include price changes.
C) Nominal GDP changes when output changes. Real GDP changes when output or prices change.
D) Nominal GDP changes when prices or output change. Real GDP changes when output changes.

Question

Quizplus · Accepted Answer

Nominal GDP is measured using current prices, so it changes with both price levels and output levels. Real GDP, however, is adjusted for inflation and reflects only changes in the quantity of goods and services produced, providing a more accurate measure of economic growth.

What Is the Difference Between Nominal GDP and Real GDP