CBSE 2024, Set 3

Question

Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Real Gross Domestic Product is a better indicator of economic growth of a nation as compared to Nominal Gross Domestic Product.
Reason (R): Real Gross Domestic Product measures the value of goods and services at current year prices. A). Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). B). Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A). C). Assertion (A) is true, but Reason (R) is false. D). Assertion (A) is false, but Reason (R) is true.

Edvaya · Accepted Answer

The correct answer is Assertion (A) is true, but Reason (R) is false.. Assertion (A) is true because Real GDP removes the effect of inflation and shows the actual increase in the physical output of goods and services. Reason (R) is false because Real GDP measures the value of goods and services at constant (base year) prices, whereas Nominal GDP measures them at current year prices.

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Economics > Introductory Macroeconomics > National Income Aggregates

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