What distinguishes nominal GDP from real GDP?

Nominal GDP and real GDP serve distinct purposes in measuring a country's economic performance. The correct choice highlights that nominal GDP is measured using current market prices, reflecting the value of goods and services in today's economy. This means that nominal GDP can fluctuate significantly from year to year due to changes in price levels, such as inflation or deflation.

In contrast, real GDP is adjusted for inflation, which allows for a more accurate comparison of economic output over time. By using constant prices from a base year, real GDP effectively removes the impact of price changes, providing a clearer view of an economy's true growth. This distinction is crucial because it helps policymakers and economists understand the real changes in economic activity without the distortion of price variations.

The other options insightfully capture other nuances, but they do not accurately define the primary distinction between nominal and real GDP. While certain aspects like government spending or net exports can have implications for GDP calculations, they do not directly differentiate nominal from real GDP.