Real GDP is:

Question

Real GDP is:

BlackTom AI · Accepted Answer

The question asks us to identify what Real GDP is among the given options.
Option a: 'the production of goods and services valued at current-year prices' describes nominal GDP, which uses the prices of the year in which the output is produced. This does not adjust for inflation, so it does not represent Real GDP.
Option b: 'the production of goods and services valued at constant prices' matches the standard definition of Real GDP, since it uses prices from a base year to strip out the effects of price level changes and reflect true output. This is the correct concept for measuring real economic growth.
Option c: 'the production of goods and services valued at future-year prices' would involve projecting or discounting to future prices, which is not how Real GDP is defined in macroeconomics; Real GDP uses a fixed set of constant prices, not future ones.
Option d: 'the production of goods and services valued at the ratio of current-year prices to constant prices' resembles thinking in terms of a deflator or price index, but Real GDP itself is not defined as a ratio; the ratio (price level) contributes to the GDP deflator, while Real GDP uses constant prices. This option confuses the concept with price level adjustments.

Real GDP is:

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