Question

When goods and services are evaluated at constant prices, the measured value is known as ........

• A. Nominal GDP
• B. Inventory
• C. Inflation
• D. Real GDP

Hint:

Remember: Nominal = Current Prices; Real = Constant Prices. Real GDP is best for comparing growth across years.

Answer 1

The Correct Option is D

Step 1: Understand the key terms.
- Nominal GDP: Measures goods and services at current prices, affected by inflation.
- Real GDP: Measures goods and services at constant prices of a base year, removing inflation effect.
Step 2: Apply to the question.
The question clearly says “evaluated at constant prices” → this refers to Real GDP.
Step 3: Eliminate incorrect options.
- (A) Nominal GDP → uses current prices, not constant.
- (B) Inventory → stock of goods, not GDP measure.
- (C) Inflation → general rise in price level, not GDP.
Final Answer: \[ \boxed{\text{Real GDP}} \]