If the real gross domestic product (GDP) increases, what does it imply?
Show answer & explanation
Correct answer: A
Explanation
Correct Answer:
Option 1: The volume of production increases.
Explanation:
If Real GDP increases, it implies that the actual production of goods and services within the country has risen. Real GDP is measured at constant prices, thereby eliminating the impact of inflation. Therefore, it serves as a true indicator of economic growth.
Additional Facts:
Option 1: Correct Answer.
Option 2: Incorrect.
Option 3: Currency devaluation is a separate topic.
Option 4: Trade deficit is a separate topic.
Potential Questions for Upcoming Exams:
Question: What is the full form of GDP?
Answer: Gross Domestic Product
Question: What is Nominal GDP?
Answer: GDP at current prices
Question: What is Real GDP?
Answer: GDP at constant prices
Question: What does economic growth signify?
Answer: Growth in production