Question:

“Real Gross Domestic Product (GDP) is a better indicator of economic growth of a nation as compared to the Nominal Gross Domestic Product (GDP).”
Do you agree with the given statement? Justify your answer with a valid hypothetical numerical example.

Show Hint

Real GDP reflects true economic growth by eliminating the impact of price changes.
Updated On: Jan 30, 2025
Hide Solution
collegedunia
Verified By Collegedunia

Solution and Explanation

Nominal GDP is calculated using current market prices, whereas Real GDP adjusts for changes in price levels (inflation/deflation). Example: If Nominal GDP increases from Rs. 500 crore to Rs. 600 crore, but inflation is 10%, Real GDP will show an actual growth of only Rs. 40 crore (Rs. 100 crore increase - Rs. 60 crore inflation).

Was this answer helpful?
0
0

Top Questions on Cost Function and Marginal Cost

View More Questions

Questions Asked in CBSE CLASS XII exam

View More Questions