Real GDP is calculated in a way such that goods and services are evaluated at some constant set of prices. Since these prices remain fixed, if the Real GDP changes, we can be sure that it is the volume of production which is undergoing changes. Nominal GDP, on the other hand, is simply the value of GDP at the current prevailing prices.
If output in an economy is decreasing but G.D.P. of the country is increasing, which G.D.P. is it?
Nominal G.D.P.
The correct answer is **Nominal G.D.P.**.
- **If GDP is increasing while output is falling, it must be due to rising prices.**
- **Nominal GDP includes inflation, which can cause GDP to rise even when production declines.**
- **(a) Real GDP** → Incorrect, as it removes price changes.
- **(b) Domestic Income** → Incorrect, as it is not necessarily linked to GDP growth.
- **(c) GDP at constant price** → Incorrect, as it accounts for inflation and wouldn't increase if output decreases.
Important Questions from National Income and Related Aggregates
In the calculation of GDP by Expenditure method, what should be added from the following:
(A) Private Final Consumption expenditure
(B) Investment Expenditure
(C) Net imports
(D) Net exports
(E) Government Final Consumption Expenditure
Choose the correct answer from the options given below:
Fill in the blanks:
In a modern economy, money comprises of _______ and _______.
Which of the following makes the workers highly vulnerable?
If Marginal Propensity to Consume (MPC) is 4 times the value of the Marginal Propensity to Save (MPS), determine the value of MPC:
Match List-I with List-II:
List-I List-II (A) Ex-ante saving (I) Actual Saving (B) Ex-post consumption (II) Planned Saving (C) Ex-ante consumption (III) Planned Consumption (D) Ex-post saving (IV) Actual Consumption
