Practicing Success
Practicing Success
CUET Preparation Today
Real GDP is calculated in a way such that goods and services are evaluated at some constant set of prices. Since these prices remain fixed, if the Real GDP changes we can be sure that it is the volume of production which is undergoing changes. Nominal GDP, on the other hand, is simply the value of GDP at the current prevailing prices. |
When value of final goods and services are estimate at current price, it is known as ________________. |
Real G.D.P. Nominal G.D.P. G.D.P. at constant prices Consumer Price Index |
Nominal G.D.P. |
The answer is Option 2: Nominal G.D.P..
Nominal GDP is the value of all final goods and services produced in an economy in a given period, valued at current market prices. This means that nominal GDP includes the effects of both changes in the volume of production and changes in prices. Real GDP, on the other hand, is a measure of the total value of goods and services produced in an economy, adjusted for inflation. This means that real GDP reflects the actual change in the volume of goods and services produced, rather than just the change in prices. GDP at constant prices is a measure of the total value of goods and services produced in an economy, valued at the prices of a base year. This means that GDP at constant prices eliminates the effects of inflation and allows for a more accurate comparison of economic output over time. The Consumer Price Index (CPI) is a measure of the average change in prices over time in a basket of consumer goods and services. The CPI is used to adjust nominal GDP for inflation in order to calculate real GDP. Therefore, the only option that correctly describes what it is called when the value of final goods and services are estimated at current prices is nominal GDP. |
