What is the difference between real GDP and nominal GDP? Which is the better measure of economic well-being, and why?© BrainMass Inc. brainmass.com October 17, 2018, 9:45 am ad1c9bdddf
Let me make this as simple as possible.
GDP stands for Gross Domestic Product, and does not count overseas investments (that would be Gross National Product).
Nominal versus Real:
Nominal GDP uses present-day prices. If inflation is pushing prices up, then this is counted in the nominal figure. But if the dollar is inflated in value, the nominal GDP would be a false reading. The dollar has lost value.
Real GDP tries to compensate for nominal 'false readings' by using a base year. That means it will use prices that were in effect in 2000 or something to have a measure from which to compare economic development in 2012. ...
The expert examines real GDP and nominal GDP differences.
What is the difference between real GDP and nominal GDP? Does GDP accurately reflect our nation's productivity?
During 2004, the national average gas price rose from $1.50 a gallon to $2.25 a gallon. The government has stated that the high price of gas will remain as it is. Discuss how this cost influences your decision to buy a new car. Based on your budget, would you buy the large car that gets 7 miles per gallon or the car that gets 25 miles per gallon? Explain.
What is the difference between real GDP and nominal GDP? Does GDP accurately reflect our nation's productivity? Explain your answer.View Full Posting Details