Real GDP and nominal GDP differ because real GDP:
A)is adjusted for changes in the nation's distribution of income.
B)includes the economic effects of international trade.
C)is equal to the nominal GDP minus the total tax payments.
D)has been adjusted for changes in the price level.

Question

Quizplus · Accepted Answer

Real GDP has been adjusted for changes in the price level, while nominal GDP has not. Real GDP reflects changes in the quantity of goods and services produced, while nominal GDP reflects changes in both quantity and prices. Adjusting GDP for inflation (i.e. converting nominal to real GDP) allows for a more accurate measure of economic growth since it separates changes in output from changes in prices.

Real GDP and Nominal GDP Differ Because Real GDP