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GDP is not the perfect measure of development because in many cases the GDP of a country may be increasing even though development is not. This can be due to inflation. As the prices of goods rise, GDP will also rise however, this does not mean that production or the standard of living is also increasing. This is known as Nominal GDP.

To get a better understanding of whether a country is developing, one must consider the Real GDP of that country. Real GDP involves using base prices from a specified year in the past to calculate the current GDP. This allows us to overcome inflation and compare the GDP of a country for two different years to find out if production has actually increased or not.

Ofcourse, there are many other factors that go into whether a country is experiencing an increase in the standard of living such as overall happiness of the people in the country.

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