What does Nominal GDP measure?

Nominal GDP measures the value of an economy's output at current prices. This means it calculates the total monetary value of all final goods and services produced within a country's borders in a given period using the prices that are current at the time of measurement. Since it reflects the prices that are prevailing in the market, nominal GDP can be influenced by changes in price levels, such as inflation or deflation.

In contrast, other options relate to different economic measures. The value of output at constant prices refers to real GDP, which adjusts for inflation and provides a clearer picture of economic growth by measuring output in terms of a base year’s prices. Long-term economic growth is typically assessed using trends in real GDP rather than nominal figures. Lastly, unemployment rates are a measure of the labor market's health and do not relate to GDP directly. Understanding nominal GDP is crucial for analyzing economic performance and making comparisons over time, but it is essential to also consider real GDP to account for changes in the price level.