Economics (AS & A Level) · Oct / Nov 2022 · Paper 32 · Question 19

Growth rates can be calculated using changes in the value of GDP from year to year. Why is real GDP considered to be a better indicator than nominal GDP for this calculation?

1. AReal GDP adjusts for price changes by using a base year.
2. BReal GDP ignores the effects of fluctuations in exchange rates on purchasing power.
3. CReal GDP includes changes in the size of the population.
4. DReal GDP measures GDP at factor cost rather than market prices.

As printed in the paper