Real GDP differs from nominal GDP because it:

A Uses current prices

B Adjusts for inflation using base-year prices to reflect actual output changes

C Includes imports

D Excludes government spending

✓ Correct Answer: Option B

Real GDP = Nominal GDP adjusted by GDP deflator. Removes price-level effects to measure actual output growth. Real GDP growth is the true indicator of economic expansion.

💡 Why is B) the correct answer?

The correct answer to the question "Real GDP differs from nominal GDP because it:" is Option B: Adjusts for inflation using base-year prices to reflect actual output changes.

The other options — A) Uses current prices, C) Includes imports, D) Excludes government spending — are incorrect for this Pre-MBA Exam Prep question. As explained above: Real GDP = Nominal GDP adjusted by GDP deflator. Removes price-level effects to measure actual output growth. Real GDP growth is the true indicator of economic expansion.

📚 About This Pre-MBA Exam Prep Practice Question

This 2-level Pre-MBA Exam Prep question from the Economics topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free Pre-MBA Exam Prep practice test or use flashcards for spaced repetition review.

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Real GDP differs from nominal GDP because it:

✓ Correct Answer: Option B

📚 About This Pre-MBA Exam Prep Practice Question

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