What is the main purpose of measuring real GDP instead of nominal GDP?
Correct answer: A. To remove the effect of price changes
- A. To remove the effect of price changes
- B. To include foreign production by residents
- C. To measure only government production
- D. To exclude investment in new capital
Explanation
Real GDP values output using prices from a base period, so changes more closely reflect changes in production. Nominal GDP can rise merely because prices have increased.
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