Why do economists prefer to compare Real GDP figures for various years instead of GDP figures?
A) Because when GDP in one year is higher than in another year,there is no way to tell why it is higher.Is it because output is higher,prices are higher,etc.? This is not the case with Real GDP.If Real GDP is higher in one year than in another year,it is because output is higher.
B) Because when GDP in one year is higher than in another year,there is no way of knowing if the quality of goods produced is higher in one year than the other.This is not the case with Real GDP.If Real GDP is higher in one year than in another year,it is because the quality of the goods produced is higher.
C) Actually the question is incorrect.Economists prefer to compare GDP figures instead of Real GDP figures.
D) Because Real GDP is easier to compute than GDP.
E) Because when GDP in one year is higher than in another year,there is no way to tell if the quality of life is higher in one year than the other.This is not the case with Real GDP.If Real GDP is higher in one year than in another year,it is because the quality of life is higher.

Question

Quizplus · Accepted Answer

Economists prefer to compare Real GDP figures for various years instead of GDP figures because Real GDP takes inflation into account, provide a better measure of economic growth, and shows the actual increase in output. This is not the case with GDP figures as an increase in GDP might be due to an increase in prices and not necessarily due to an increase in output.

Why Do Economists Prefer to Compare Real GDP Figures for Various