Comparing nominal GDP of 2010 to nominal GDP of twenty years ago
A) is an inaccurate measure of the change in total production.
B) has no economic meaning.
C) will be an accurate measure of the change in total production.
D) determines the extent to which the cost of living changed.
E) cannot be done because the two GDP measures use different prices.

Question

Quizplus · Accepted Answer

Nominal GDP does not take into account changes in prices, so comparing the nominal GDP of two different years would not give an accurate measure of changes in total production. This is because an increase in nominal GDP could be due to an increase in prices rather than an actual increase in output. Therefore, using nominal GDP to compare the total production of 2010 with that of twenty years ago is an inaccurate measure of the change in total production.

Comparing Nominal GDP of 2010 to Nominal GDP of Twenty