Final answer:
Nominal GDP uses current prices to measure total production, while real GDP adjusts for changes in prices to reflect actual output.
Explanation:
Nominal GDP measures the total value of all production in an economy using current prices. For example, if a country's nominal GDP increases, it could be due to rising prices rather than an actual increase in production.
Real GDP, on the other hand, adjusts for changes in prices and reflects the actual quantity of goods and services produced by an economy over time.
Understanding the difference between nominal and real GDP is essential for assessing a country's economic performance accurately.
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