Q. The value of national income adjusted for inflation is called:
Answer: Real national income
Notes: The value of national income is adjusted for inflation that is calculated from a reference point which is a base year. In order to compare the GDP figures (and other macroeconomic variables) of different countries or to compare the GDP figures of the same country at different points of time, we cannot rely on GDPs evaluated at current market prices. For comparison we take the help of real GDP. Real GDP is calculated in a way such that the goods and services are evaluated at some constant set of prices (or constant prices). Since these prices remain fixed, if the. Real GDP changes we can be sure that it is the volume of production which is undergoing changes.