Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 23 - Part VIII - Measuring a Nation's Income - Questions for Review - Page 502: 6

Answer

Economists use real GDP rather then nominal GDP to measure the well being.

Work Step by Step

Real GDP is not affected by changes in prices, so it reflects only changes in the amounts being produced. You cannot determine if a rise in nominal GDP has been caused by increased production, or higher prices.
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