Real GDP measures national output adjusted for price-level changes. This means that it takes into account inflation or deflation and provides a more accurate measure of economic growth or contraction than nominal GDP. Choices A, B, D, and E are incorrect as they do not accurately describe what real GDP measures.

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Real GDP Measures

Question 31

Multiple Choice

Real GDP measures

A) personal income adjusted for taxes paid to the government.
B) national output adjusted for changes in the quality of products.
C) national output adjusted for price-level changes.
D) nominal output adjusted for changes in national income because of economic booms.
E) national output adjusted for unemployment.

Correct Answer: