PRC-3 · Chapter 13 · Question 14 of 50
A politician claims that the country's GDP grew by 10% this year. However, inflation was also exactly 10% this year. To find out if actual physical production increased at all, economists must look at the:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Real GDP
Explanation
Real GDP adjusts the nominal GDP by stripping out the illusion of inflation, revealing whether the actual physical volume of goods and services produced has grown.
More National Income and Its Determination MCQs
- Q16A farmer sells wheat to a miller for Rs. 100. The miller turns it into flour and sells it to a baker for Rs. 150. The baker makes bread…
- Q17A country has a massive informal sector where mechanics, tutors, and street vendors operate entirely in 'cash-in-hand' transactions to…
- Q18According to the macroeconomic circular flow model, an economy is strictly in equilibrium when:
- Q19While GDP is heavily used to measure a country's success, critics argue it is a poor measure of the true 'standard of living'. Which…
- Q20According to Keynesian theory, the Long-Run Aggregate Supply (LRAS) curve eventually becomes perfectly vertical. What economic state does…