Real GDP yields a better reading of the economy's overall health than nominal GDP because Real GDP:
I. does not include disposable income and transfer payments.
II. accounts for changes in price level.
III. includes capital goods and consumer goods.
IV. is measured in current prices.
A. I and III
B. II only
C. I and IV
D. IV only
E. I and II
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Correct Answer: B, II. Real GDP measures overall output to determine if production has increased over time. Nominal GDP includes inflation; if nominal GDP rises, output may not because only prices could have increased.