Final answer:
Nominal GDP is the Gross Domestic Product measured in current prices, without adjusting for inflation. It is calculated by multiplying the quantity of every good or service produced by the price at which it was sold and summing up these values. However, comparing nominal GDP values over time can be misleading due to the effects of higher prices.
Step-by-step explanation:
Nominal GDP stands for Gross Domestic Product measured in current prices, without any adjustment for inflation. It is calculated by multiplying the quantity of every good or service produced by the price at which it was sold and summing up these values for all goods and services. However, nominal GDP can be misleading when comparing GDP values from different years, as it includes the effects of higher prices. To accurately measure the increase in production, the effects of higher prices need to be extracted using the GDP deflator