Explanation The GDP is the summation of the money value of all the goods and services produced within the political boundary of a country within a financial year. There are two different ways of calculating the GDP of the economy and they are the Real GDP and the Nominal GDP. The Real GDP is the GDP calculated at the constant prices. There will be a base price index and the value of goods and services that will be calculated on the base of the constant prices. Thus, it will measure the GDP of the economy on the same base year price index which will help us to identify the inflation in the economy. The Nominal GDP is the GDP calculated at the current prices. The GDP will be calculated by multiplying the quantity of goods and services produced with the current year market prices which will include the inflation impact...

Why economists use Real GDP than Nominal GDP to determine the economic well-being.

PRINC. OF ECON. LOOSE W/APLIA+COUPON

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ISBN: 9781337365635

Author: Mankiw

Publisher: CENGAGE C

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Question

Chapter 23, Problem 6QR

To determine

Why economists use Real GDP than Nominal GDP to determine the economic well-being.

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Similar questions

Why might even real GDP be a misleading index of changes in output between 1950 and 2015 in the United States?
List some of the reasons why economists should not consider GDP an effective measure of the standard of living in a county.
Nominal GDP in Nowhereland in 2018 and 2019 is as follows: Can you say that the production of goods and services in Nowhereland has increased between 2018 and 2019? Why or why not?

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