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What Is the Difference Between Real and Nominal GDP and Why

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What is the difference between real and nominal GDP and why do economists make this distinction?


Definitions:

Price of Labor

The wages or compensation earned by workers for their labor, often determined by supply and demand in the labor market.

Employ More Labor

The process of hiring additional personnel to increase the output or productivity of a business.

Employ More Capital

The process of investing additional funds or resources into a business to increase its capacity or efficiency.

Marginal Product

The boost in production resulting from one more unit of input.

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