The value of GDP at the current prevailing prices is called _______.

The correct answer is nominal GDP.

Key Points

• The gross domestic product (GDP) value at the most recent prices is known as nominal GDP.
• It is determined by current market pricing, without taking into account the impact of inflation or deflation.
• It shows how much money was spent on the commodities and services a nation generated within a certain fiscal year. In contrast to real GDP, which measures the rate of price rises in an economy, nominal GDP excludes changes in prices brought on by inflation.
• Due to the fact that real GDP only takes into account production and is unaffected by changes in prices or exchange rates, it is regarded as a reliable measure of a nation's economic progress.
• Growing pricing rather than an increase in the number of goods and services produced may be the cause of nominal GDP growth from year to year.

Important Points

• Real gross domestic product (GDP), which refers to the volume level of GDP, is GDP expressed at constant prices.
• By quantifying the values of all the goods and services produced in a given year in terms of a base period, one can derive constant price estimates of GDP.
• The standard measurement of the value added produced via the production of goods and services in a nation over a specific time period is the gross domestic product (GDP).
• Consequently, it also accounts for the revenue generated by that manufacturing, or the total amount spent on finished goods and services (fewer imports).