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CBSE 2019 Class 12 Economics Outside Delhi Set 1
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Question : 14 of 24
Marks:
+1,
-0
Explain the meaning of Real Gross Domestic Product and Nominal Gross Domestic Product, using a numerical example.
Solution:
Real GDP refers to the money value of all the final goods and services calculated at a base year price produced with in the domestic territory in a given time period. Nominal GDP refers to the money value of all the final goods and services calculated at a current year prices produced with in the domestic territory in a given time period.
In the above table real GDP is for the year 2018 while nominal GDP is for the same year. Such a difference in GDP is due to increase in prices from base year to current year. Therefore, Real GDP is always considered as true indicator of economic growth.
| Commodities | Quantity in 2018 | Price in 2011 | Prices in 2018 | RealGDP | Nominal GDP |
|---|---|---|---|---|---|
| A | 10 | 5 | 10 | 50 | 100 |
| B | 15 | 7 | 10 | 105 | 150 |
| C | 20 | 10 | 15 | 200 | 300 |
| D | 5 | 12 | 15 | 60 | 75 |
| Total | 415 | 725 |
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