Question

I just heard on the news that GDP is higher this year than it was last year.This means that we are better off this year than last year. "Comment"

Answer 1

No, there are several possibilities in the market.

• The price level in the market may have increased, that will increase the nominal GDP and that will cause the GDP to increase but the overall increase in the real GDP will be no better than before.
• There can be increased inequality in the market i.e. the income of some people will have increased and the other might have seen poverty, this will increase the GDP but people might have seen worse days.
• the environment levle might have degraded in the market.

All this are the reason why the increase in the nominal GDP may not have real income increase.