Describe the difference between real GDP and nominal GDP. Which concept is more useful for measuring change in the economy over time? Why?

What will be an ideal response?

Real GDP is an adjusted-for-inflation measure of the value of all final goods and services produced in a domestic economy during a given year. Nominal GDP measures the nominal or dollar value of all goods and services produced within the borders of a given country in a given year. Real GDP differs from nominal GDP in that prices are held constant when calculating real GDP so only changes in output are measured. Real GDP is the measure used by the U.S. government to estimate the growth rate of its economy. This measured is preferred to nominal GDP figures because nominal values are affected by price changes and are misleading indicators of real growth.