Question:medium

“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 13, 2026
Show Solution

Solution and Explanation

Nominal GDP is determined by current market prices. Real GDP, conversely, accounts for price level fluctuations (inflation or deflation). For instance, if Nominal GDP rises from Rs. 500 crore to Rs. 600 crore with a 10% inflation rate, the Real GDP growth will be Rs. 40 crore, representing the Rs. 100 crore increase minus Rs. 60 crore attributed to inflation.

Was this answer helpful?
0

Top Questions on Cost Function and Marginal Cost