If You Wanted to Measure Whether the Output of an Economy

question 73

Multiple Choice

If you wanted to measure whether the output of an economy was increasing or decreasing across time periods, you would use the real GDP data rather than the nominal GDP data because

• A) exports are excluded from real GDP but not nominal.
• B) real GDP incorporates the impact of federal budget deficits and surpluses; nominal GDP does not.
• C) real GDP reflects the impact of transfer payments on the economy, but nominal GDP does not.
• D) real GDP adjusts for changes in the general level of prices, but nominal GDP does not.

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