Question
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
Real G.D.P. increases only when.
This question was previously asked in
Shift 29/05/2023 3:30 PM - 6:30 PM
A
Prices increases
B
Prices decreases
C
Production increases
D
Production decreases
Correct Answer
Production increases
Detailed Explanation
The correct option is (3)
Production increases
Real GDP is a measure that accounts for changes in production volume while keeping prices constant. As such, an increase in real GDP implies an increase in the actual production of goods and services within an economy, regardless of any changes in prices.
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