What are the advantages and disadvantages of using nominal output as a measure of economic performance?

It is a great snapshot and larger number to look at if looking and comparing against that one period in time. If trying to compare over years, the results will be flawed.

Nominal output (GDP) measures economic output based on historic prices during a year. There is really no such thing as "current" prices because economic reports have a lag from the time prices were measured and the time reports are a released. Also, I think the explanation above is a little over simplified as economists measure spending, investment, and net imports as an estimate of nominal GDP; rather than simply multiplying the quantity of goods and services by their prices. GDP also includes investment, which is arguably future output. The explanation above is also missing the important fact that GDP is adjusted for net imports; another reason wen cannot simply multiply quantity of goods and services by their prices to derive GDP.

Great tool for looking at actual growth over time and accounts for the changes in the price of goods that over time will purchase less items due to rising prices/ inflation. It is great for looking at countries or regions that have lower prices for the same/ similar basket of goods. This makes the real power of their dollar a little stronger than their higher inflation counterpart. In short it doesn't only measure your dollar, but what that dollar can buy over time. Part of the "Time value of money"

Nominal output is easier to calculate because it does not involve adjusting for inflation. It is a straightforward measure of the total value of economic activity within a specified time frame. Nominal output allows for easy comparisons across different industries within the same economy, as it measures the value of goods and services in current prices.

It is a useful tool in estimating or projecting government revenue as it is measurd in current prices. It is also useful in estimating the Net debt to GDP ratio.

Since GDP is observable in nominal terms so it can be conveniently captured and then used to calculate real GDP. Others important macroeconomic variables like savings, investments, government expenditures and it's revenues and expenditures are also nominal so these can be translated in terms of their respective ratio in terms of nominal GDP to analyse across space and over time.

Nominal output is easier to connect and to compare with other important nominal variables such as Tax Revenue, Investment etc. However, it is prone to changes in price level.

Since nominal output does not adjust for inflation, it is less useful for guiding economic policy decisions. Policymakers are typically more interested in real output, which provides a clearer picture of the economy's underlying growth and performance.

Changes in price level impacts nominal GDP therefore it becomes less useful for over the year productivity comparison for a country or even across the countries. Moreover, both nominal as well as real GDP do not fully reflect the economic welfare, they need to be observed along with some other socio-economic variables.

These caveats are not unique to nominal GDP but are also present in real GDP. These are complimented with human development indicators to get a more complete picture. However, GDP and even the human development indicators fails to capture happiness.

Real output allows for the comparison of economic performance across different time periods. By removing the impact of price fluctuations, it provides a more reliable gauge of growth trends, making it easier to analyse the long-term health of an economy.

Real output primarily measures the formal sector of an economy, which means that it may not capture the full extent of economic activity, especially in developing countries where the informal sector can be significant.

with either choice, there has to be a supporting explanation that may alter the initial view of the reader. the big factor between the two is inflation. numbers from nominal vs numbers from real, for the same time period, can appear drastically different. i do think it would be benefical to have both published, but the only ones who would be interested are people like myself. if there conclusion is either a gain or loss in productivity, the author should provide their objective data and conclusions

While the most well-known measure is the gross domestic product (GDP), there are limitations and biases with such measure. A major limitation is that it is hard to gauge economic growth in the standard of living. It would be good to see relative productivity metrics to estimate economic potential, as well.

When comparing trends overtime, nominal GDP is a good measure because no adjustments are made to the number while id using real GDP the basis of adjustment may cause some comparison problems depending on the basis of adjustment