Why do economists use real GDP rather than nominal GDP to measure economic well-being?
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Economists track real gross domestic product (GDP) to determine the rate that an economy is growing without any of the distorting effects of inflation. The real GDP number allows them to measure growth more accurately.
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Nominal GDP refers to the value of goods and services produced in an economy at the current market prices. ... Real GDP is regarded as the better measurement of economic well being because it reflects the changes in the real output whereas changes in the nominal GDP may arise because of changes in the market prices.
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