Answer to Question #73891 in Macroeconomics for Suleman

Question

Contrast the nominal GDP and real GDP. Why do economists consider real gdp as a more reliable measure for comparing changes in the production level over a series of years?

Answer 1

Nominal GDP is the total gross national product evaluated at current market prices. Real GDP is gross national product calculated using the prices of a selected base period . Economists consider real gdp as a more reliable measure for comparing changes in the production level over a series of years because real GDP is calculated taking into account level of inflation at current period.