Question

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. 

Options

• Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true, but Reason (R) is false.

• Assertion (A) is false, but Reason (R) is true.

Answer 1

Assertion (A) is true, but Reason (R) is false.

Explanation:

Real GDP is a more accurate indication of economic growth than nominal GDP as it accounts for the value of goods and services at base year prices. Thus, it can be referred to as GDP at constant prices.