The Difference Between Nominal GDP and Real GDP Is That

question 40

Multiple Choice

The difference between nominal GDP and real GDP is that nominal GDP

• A) measures the total value of all final goods and services, whereas real GDP measures the value of all goods and services, whether they are intermediate or final.
• B) measures a country's production of final goods and services at current prices, whereas real GDP measures a country's production of all final goods and services at fixed historical prices.
• C) is measured in dollar terms whereas real GDP is measured in terms of numbers of goods and services produced.
• D) measures a country's production of final goods and services at fixed prices, whereas real GDP measures a country's production of all final goods and services at current market prices.

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Definitions:

Inventory

The quantity of goods that a company has in stock, ready for sale or distribution.

Investment Component

A part of economic activity related to spending on goods and services not for immediate consumption but for future benefit.

Government Purchases Component

The part of gross domestic product (GDP) that includes spending by all levels of government on goods and services.

Social Security Benefits

Government payments made to eligible individuals, such as retirees or disabled workers, as part of a social insurance program.