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.
Real G.D.P. increases only when?
Production increases
The correct answer is **Production increases**.
- **Real GDP** measures the **actual output of goods and services** in an economy, adjusted for inflation.
- **If only prices increase, nominal GDP increases, not real GDP.**
- **(a) Incorrect** → Price increases affect nominal GDP, not real GDP.
- **(b) Incorrect** → Price decrease does not necessarily indicate GDP growth.
- **(d) Incorrect** → Production decrease would lower GDP.
Important Questions from National Income and Related Aggregates
Match List-I with List-II:
List-I List-II (A) ΔC/ΔY (I) APS (B) S/Y (II) MPS (C) ΔS/ΔY (III) APC (D) C/Y (IV) MPC Choose the correct answer:
Central Pollution Control Board (CPCB) has identified ______ categories of large and medium industries as polluting industries.
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 Identify the Stock variable/variables:
A. Income
B. Output
C. Capital
D. Profits
E. Money SupplyA firm buys a machine for ₹55 lakhs. The expected life of the machine is ten years. The annual depreciation of the machine is:
