Question : Economic growth can be measured by:
Option 1: Changes in real GDP
Option 2: Changes in nominal GDP
Option 3: Changes in aggregate demand
Option 4: Changes in aggregate supply
Correct Answer:
Changes in real GDP
Solution : The correct answer is (a) changes in real GDP (Gross Domestic Product).
Real GDP is a measure of the total value of goods and services produced within an economy over a specific period, adjusted for inflation or changes in the overall price level. It represents the output of an economy and is commonly used as an indicator of economic growth.
When real GDP increases over time, it suggests that the economy is producing more goods and services, indicating economic expansion and growth. Conversely, when real GDP decreases, it indicates a contraction or decline in economic activity.
