When goods and services are evaluated at some constant set of prices, it can also be defined as.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Real GDP.
Real GDP refers to the value of goods and services produced in an economy evaluated at constant prices (i.e., prices from a base year). This eliminates the effect of inflation and allows for comparison of economic output over time.
Other Options:
Option 2: GDP Deflator – This is a price index used to convert nominal GDP into real GDP. It measures the overall level of prices in the economy.
Option 3: Constant Prices – This refers to the use of base-year prices, but on its own it's not a measure.
Option 4: Nominal GDP – This is GDP calculated at current prices, which includes the effect of inflation.