Question

20. Which of the following statements are correct
1. GDP evaluated at current market price is used for comparison of GDPs of different countries.
2. Nominal GDP is the value of GDP at the current prevailing prices.
3. Real GDP is evaluated at constant prices.
Correct answer code is:

• A. Only 1
• B. Only 1 and 2
• C. Only 2 and 3
• D. All of the above

Answer 1

The correct option is C Only 2 and 3

In order to compare the GDP figures (and other macroeconomic variables) of different countries or to compare the GDP figures of the same country at different points of time, we cannot rely on GDPs evaluated at current market prices. For comparison we take the help of real GDP. It is because nominal GDP might increase or decrease because of prevailing tax rates of a country. However, real GDP shows real production