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Why is inflation important to consider before comparing one year of production within a country to a different year of production?


Politicians set inflation numbers to influence the economy. Taking inflation out ensures a better comparison of what really happened.


Nominal GDP will be much lower if it contains inflated numbers.


Real GDP will be identical to nominal GDP if you don't consider inflation first.


If inflation is included when comparing data, it may overstate actual production that occurred.


Factoring inflation allows one to calculate deficit spending which will be useful for fiscal policy decisions

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