Macro Unit 2.6A- Nominal and Real GDP Advanced Placement Macroeconomics

Mr. Clifford introduces GDP, highlighting the challenges in calculating its dollar value due to inflation. He explains the difference between nominal GDP, which is not adjusted for inflation, and real GDP, which is adjusted using a base year. A visual comparison shows that nominal GDP appears to grow faster because it doesn't account for inflation, whereas real GDP provides a more accurate growth rate over time.

What is one of the main challenges in calculating the dollar value of goods produced in a country?

• The dollar value remains constant over time.

• Inflation causes the dollar value to change.

• The dollar value is irrelevant to GDP.

• Goods are not produced in every country.

How is Nominal GDP measured?

• In constant dollars adjusted for inflation.

• By excluding inflation effects.

• In current dollars without adjusting for inflation.

• Using a base year for comparison.

What does Real GDP account for that Nominal GDP does not?

• Government policies.

• Technological advancements.

• Inflation adjustments.

• Changes in population.

Why does Nominal GDP appear to increase faster than Real GDP?

• Because it includes inflation effects.

• Because it excludes inflation effects.

• Due to changes in population.

• Because it uses a base year.

What might you discover about GDP when adjusting for inflation?

• GDP increases only slightly over time.

• GDP remains constant over time.

• GDP decreases over time.

• GDP increases significantly over time.