Questions: Which measure of GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant?

Which measure of GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant?
Transcript text: Which measure of GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant?
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Solution

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Answer

The answer is Real GDP.

Explanation
Option 1: Net national product

Net national product (NNP) is the total market value of all final goods and services produced by the residents of a country in a given period, minus depreciation. It does not specifically measure changes in the quantity of goods and services produced while holding prices constant.

Option 2: Real GDP

Real GDP measures the value of economic output adjusted for price changes (inflation or deflation). It reflects the quantity of goods and services produced in the economy, holding prices constant, which makes it the correct measure for understanding changes in production volume over time.

Option 3: Nominal GDP

Nominal GDP measures the value of all finished goods and services produced within a country's borders in a specific time period using current prices. It does not account for changes in price levels and therefore does not isolate changes in the quantity of goods and services produced.

Option 4: IDONT KNOW YET

This is not a valid measure of GDP.

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