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Which measure is more appropriate when GDP rises only because prices increase?

Answer and explanation

Correct answer: Real GDP

The governing concept is the distinction between nominal and real GDP. Nominal GDP can rise merely because prices have increased, even when the quantity of production is unchanged. Real GDP values output at constant prices and therefore removes the price effect. Hence option B is correct; population, exports, and tax revenue alone cannot show the change in real production or welfare.

Related tags

Real GdpNominal GdpWelfare ComparisonGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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