Distinguish between real and nominal GDP. Which one is a better measur

Distinguish between real and nominal GDP. Which one is a better measure of the business cycle?

What will be an ideal response?

ANSWER

Nominal GDP is the value of currently produced final goods and services measured in current year prices. Real GDP is the value of currently produced final goods and services measured in constant year prices. Nominal GDP can change based on both changes in the price level and the quantities of goods and services produced whereas real GDP only changes in response to changes in the quantities of goods and services produced. Real GDP is a better measure of the business cycle.