Answer to Question #272008 in Macroeconomics for lilo

Question

GDP at current prices and constant prices in economy x

Answer 1

Gross domestic product (GDP) at constant prices refers to the volume level of GDP. Constant price estimates of GDP are obtained by expressing values in terms of a base period. The price indexes used are built up from the prices of the major items contributing to each value.

Current Prices measures GDP/ inflation/asset prices using the actual prices we notice in the economy. Current prices make no adjustment for inflation.Using constant prices enables us to measure the actual change in output (and not just an increase due to the effects of inflation.

Real gross domestic product (real GDP) is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year (expressed in base-year prices). and is often referred to as "constant-price," "inflation-corrected", or "constant dollar" GDP.