Real GDP
A)will increase in a given year even if aggregate production declines.
B)measures the current market value of aggregate production.
C)increases at a faster rate than GDP over time.
D)measures current aggregate production valued at base year prices.

Question

Quizplus · Accepted Answer

Real GDP measures current aggregate production, but values it at base year prices. This allows for a better comparison of output over time, without the effects of inflation. Option A is incorrect, as if aggregate production declines, real GDP will also decline. Option B is incorrect, as that describes nominal GDP, not real GDP. Option C is incorrect, as real GDP generally increases at a slower rate than nominal GDP due to the effects of inflation.