Question

What fundamental economic concept distinguishes nominal GDP from real GDP. (1 point) Responses Nominal GDP is the total value of goods and services produced in a country in current market prices, while read GDP adjusts for inflation and deflation, which provides a measure of output in constant prices. Nominal GDP is the total value of goods and services produced in a country in current market prices, while read GDP adjusts for inflation and deflation, which provides a measure of output in constant prices. Real GDP is the total value of goods and services produced, while nominal GDP represents only the inflation adjusted economic output. Real GDP is the total value of goods and services produced, while nominal GDP represents only the inflation adjusted economic output. Nominal GDP is always lower than real GDP because it accounts for future expectations. Nominal GDP is always lower than real GDP because it accounts for future expectations. Nominal GDP is used to measure an economy’s output, while real GDP is a concept only applicable to financial transactions and investments.

Answer 1

The fundamental economic concept that distinguishes nominal GDP from real GDP is that nominal GDP does not adjust for inflation, while real GDP does adjust for inflation. Real GDP provides a measure of output in constant prices, allowing for a more accurate comparison of economic performance over time.