What Is the Difference Between Real and Nominal GDP? If

question 138

Essay

What is the difference between real and nominal GDP? If the president of the United States (or your instructor) asked you to evaluate the economy over the past five years, which one would you use and why?

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Definitions:

Regressive

Describing a tax system where the tax rate decreases as the taxpayer’s income increases, placing a larger burden on lower-income individuals.

Taxable Income

Taxable income is the portion of your gross income that's subject to taxes after deductions and exemptions.

Tax Liability

The total amount of tax owed to the government after all deductions, credits, and prepayments have been taken into account.

Tax Refund

The amount of money returned to a taxpayer by the government when the taxpayer's total tax payments exceed their tax liability for a given year.