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: Define key terms.
- Nominal GDP: Measures economic output using current prices, thus influenced by inflation.
- Real GDP: Measures economic output using constant prices from a base year, excluding the effect of inflation.
Step 2: Analyze the question.
The phrase "evaluated at constant prices" directly corresponds to the definition of Real GDP.
Step 3: Discard irrelevant options.
- (A) Nominal GDP → is based on current prices, not constant prices.
- (B) Inventory → represents a stock of goods, not a measure of GDP.
- (C) Inflation → denotes a general increase in prices, not GDP itself.
Conclusion: \[\boxed{\text{Real GDP}}\]