Choose the correct statement. A.We measure the change in production by comparing nominal GDP in one...

Choose the correct statement.

A.We measure the change in production by comparing nominal GDP in one year with real GDP in the previous year.

B.Nominal GDP is just a more precise name for GDP.

C.When nominal GDP increases comma real GDP decreases.

D.Nominal GDP is just a more precise name for real GDP.

Expert Solution

The correct answer is (B) Nominal GDP is just a more precise name for GDP.

We measure the change in production by comparing Real GDP in one year with real GDP in the other year. Hence option (A) is wrong.

When We say that country has GDP = X we means that Market value of all goods and service produced when measure at current prices = X and this is what we called Nominal GDP i.e. Country has Nominal GDP = X. Thus Nominal GDP is just a more precise name for GDP. Hence Option (B) is right

When Nominal GDP increases due to increase in production then Real GDP also increases and hence option (C) is wrong

Real GDP is the market value of goods and services during the accounting year when measured at basy year or constant prices while Nominal GDP is the Market value of all goods and service produced when measure at current prices. Hence, option (D) is wrong.

Hence the correct answer is (B) Nominal GDP is just a more precise name for GDP

Rahul Sunny answered 1 year ago

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