Nominal GDP is: A. GDP adjusted for inflation B. GDP measured in current prices C. GDP adjusted for population size D. GDP measured in constant dollars
Question
Nominal GDP is:
A. GDP adjusted for inflation
B. GDP measured in current prices
C. GDP adjusted for population size
D. GDP measured in constant dollars
Solution
Nominal GDP is B. GDP measured in current prices.
Here's why:
Nominal GDP refers to the economic output of a country, but it doesn't take into account the effects of inflation. Therefore, it's measured in current prices, meaning the prices that were current at the time of the output. This is why option B is the correct answer.
Option A is incorrect because GDP adjusted for inflation is known as real GDP, not nominal GDP.
Option C is incorrect because GDP adjusted for population size is known as GDP per capita, not nominal GDP.
Option D is incorrect because GDP measured in constant dollars is another way to describe real GDP, which adjusts for inflation, not nominal GDP.
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