Real GDP is based on the prices existing in the year in which the goods and services were produced. Nominal GDP is real GDP adjusted to eliminate changes in prices.

Question

Quizplus · Accepted Answer

Real GDP is adjusted to eliminate the effects of changes in price, allowing for the comparison of economic output from one year to another in constant prices. Nominal GDP, on the other hand, is measured using current prices, without adjusting for inflation or deflation.

Real GDP Is Based on the Prices Existing in the Year