Final answer:
The GDP measure that reflects changes in both output and prices is called nominal GDP. It accounts for total market value of all goods and services within a period using current prices.Correct answer is c.
Step-by-step explanation:
The GDP measure that contains changes in both output and price is called nominal GDP. When evaluating the economic performance of a country, GDP (Gross Domestic Product) is a central indicator. It represents the total market value of all final goods and services produced in a country within a specified time frame, often one year.
Nominal GDP measures this output using current market prices, incorporating changes in price levels due to inflation or deflation. As prices fluctuate, nominal GDP can change even if the actual amount of goods and services produced remains constant. To distinguish between increases in production and increases due to price changes, economists compare nominal GDP to real GDP.
Real GDP adjusts nominal GDP using price indices, such as the Consumer Price Index (CPI), to reflect only actual changes in production, removing the effect of inflation. Thus, while nominal GDP can convey the inflated or deflated value of a country's output, real GDP provides a more accurate assessment of economic growth.