GDP expressed in constant, or unchanging, prices is called real GDP.
Here's a breakdown to understand why this is the correct answer:
1. Nominal GDP: This measures the value of all finished goods and services produced within a country's borders in a specific period, using current prices. It does not account for changes in price levels or inflation, thus nominal GDP can be misleading when comparing over time.
2. Real GDP: This adjusts for changes in price or inflation, using constant prices from a base year to measure the actual productivity of an economy. By doing this, real GDP presents a more accurate depiction of an economy’s size and how it's growing over time without the distortion caused by changing prices.
3. Price Level: This term refers to the average of current prices across the entire spectrum of goods and services produced in the economy. It is not a direct measure of GDP but rather a factor affecting nominal GDP calculations.
4. Net National Product: This measures the value of goods and services produced by a country’s residents, both domestically and abroad, minus depreciation. It focuses on the net value after accounting for the loss of value from aging infrastructure, machinery, and equipment.
Given these definitions, the correct terminology for GDP adjusted for price changes to reflect a true picture of economic growth is real GDP.
