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Because it shows the true value of a currency as well.

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13y ago

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In 2000 year the economy produced real GDP as a 100 and nominal GDP was 100 but in 2001 economy produced 110 so nominal is 110 what is the real GDP and why?

what is GDP in economy


Why do economist say that real GDP should be used to measure growth in an economy and not nominal GDP?

Growth in real GDP is the only true indicator of weather or not an economy is growing.


Can Real GDP rise at the same time the unemployment rate rises?

as long as a different sector of the economy contributes to GDP by more than was lost from unemployment, real GDP will rise, if only marginally.


What is an economy that experiences decreasing real GDP and increasing prices suffering from?

An economy that experiences decreasing real GDP and increasing prices suffering from stagflation.


Define potential GDP under what circumstances does actual real GDP fall short of potential GDP equal potential GDPand exceed potential GDP?

Potential GDP is basically the sum of growth in productivity, growth in labor force, and growth in number of hours worked. In a mature economy like the US, change in number of hours worked is insignificant and often ignored. -Potential GDP is the level of real GDP that the economy would produce if it were at full employment. When real GDP falls short of potential GDP the economy is not at full employment. When the economy is at full employment real GDP equals potential GDP. Real GDP can exceed potential GDP only temporarily as it approaches and then recedes from a business cycle peak.


Why does equilibrium real GDP occur where C plus Ig equals GDP in a private closed economy?

The equilibrium and the real GDP usually occurs where C plus LG equals GDP in a private closed economy because of the balance in trade.


Is real GDP the same as GDP?

The main difference is that Real GDP accounts for inflation and is calculated using Nominal GDP. It is useful when trying to compare GDPs froms different times.


Suppose an economy real GDP is 30000 in year 1 and 31200 in year 2 what is the growth rate of its real GDP?

1.02


What does gpd tell economists about business cycle?

Nominal GDP does not tell much, but real GDP tells a lot. If the real GDP has fallen from one year to another, it means that the economy is in depression. If it grows, it shows that the economy is booming. If there is no change, the economy is stagnant (i.e. it did not grow).


When there are sustained increases in real GDP over time we say that the economy is undergoing?

Economic growth. Since that is basically the definition of a growing economy, steady increase in GDP


How does real GDP affect unemployment rate?

Real GDP is a measure of the economic output of a country. The absolute measure only tells you what that output was for a particular period. The more important measure for employment is the difference between real GDP and a theoretical real GDP which economists use to calculate the maximum output of an economy. When the gap between real GDP and maximum output GDP is large, the unemployment rate will be large and vice versa.


How can one find the GDP deflator?

To find the GDP deflator, divide the nominal GDP by the real GDP and multiply by 100. The GDP deflator measures the change in prices of all goods and services produced in an economy.