Final answer:
Nominal data is not adjusted for inflation and reflects prices at the time of data collection, while real data is adjusted for inflation to allow for accurate comparisons across time. Double counting in GDP must be avoided to accurately measure the economy's output of final goods and services.
Step-by-step explanation:
The primary difference between economic data over time measured in nominal terms versus the same data series over time measured in real terms lies in the adjustment for inflation. Nominal data are raw figures that have not been adjusted for inflation, meaning they reflect the prices that were current at the time the data were collected. In contrast, real data are adjusted for inflation, which allows for comparison of economic data across different time periods by factoring out the effects of price changes. Analyzing in real terms provides a more accurate picture of an economy's true growth and purchasing power over time.
Concerning Gross Domestic Product (GDP), avoiding double counting is crucial because it ensures that the GDP measurement only reflects the value of final goods and services produced in an economy, not the intermediate goods or services that are used in the production process. Double counting would artificially inflate GDP figures and not accurately represent economic activity.