Real GDP is preferred to nominal GDP as a measure of economic performance because:

A.  nominal GDP uses current prices and thus may over- or understate true changes in output.
B.  nominal GDP only includes goods and excludes services.
C.  nominal GDP is not adjusted for population changes.
D.  real GDP accounts for changes in the quality of goods and services produced.

ANSWER:

A.  nominal GDP uses current prices and thus may over- or understate true changes in output.