Which of the following is the correct formula for real GDP?
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: Real GDP=Nominal GDP/GDP deflator
Real gross domestic product (GDP) is a measurement of economic output that accounts for the effects of inflation or deflation. It provides a more realistic assessment of growth than nominal GDP. Without real GDP, it could seem like a country is producing more when it's only that prices have gone up.