Answered: Why do economists prefer to use real…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Why do economists prefer to use real gross domestic product (RGDP) instead of nominal gross domestic product (NGDP) when measuring the economic growth of a country? Why is real GDP considered more relevant than the other?

Definition Definition Increase in the amount of goods and services produced by a country in a given period of time compared to an earlier period. Economic growth is generally coupled with a rise in national income or the purchasing power of individuals. It is often measured in terms of the increase in a country's gross domestic product (GDP), or the overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period.

Expert Solution

Introduction

GDP, often known as the national income of the economy in this context, measures the production of all commodities and services in the economy during a specific time period. It serves as a gauge for the economy's rate of expansion. It serves as a benchmark for worldwide comparisons of national performance. It excludes goods produced outside of the nation's borders and only includes those that can be produced within the economy.

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions