Question

Which of the following is true of real GDP?

A. It is adjusted for changes in prices
B. It is always equal to nominal GDP
C. It increases whenever aggregate output increases
D. It measures the value of goods and services produced within an economy, adjusted for inflation.

Answer 1

D. It measures the value of goods and services produced within an economy, adjusted for inflation. Real GDP is a measurement that adjusts for changes in prices and reflects the actual level of output in an economy, making option D the correct answer.

Step-by-step explanation:

Real GDP is a measurement that adjusts for changes in prices, making it a more accurate reflection of the actual level of output in an economy. It measures the value of goods and services produced within an economy, adjusted for inflation. In contrast, nominal GDP is expressed in dollar terms and can increase even if prices rise, without reflecting an increase in actual output. Therefore, option D is the correct answer.