Which one of the following statements is not correct ?

Statement 3 is incorrect because Nominal GDP is calculated by valuing the output of a given year at current prevailing market prices, not constant prices [3]. In contrast, Real GDP is an inflation-adjusted measure that evaluates goods and services at a constant set of prices (base year prices) to reflect the true volume of production [1]. Statement 1 is correct as Real GDP uses common base-year prices to compare output across different years [1]. Statement 2 is correct because Potential GDP represents the level of real GDP an economy can sustain when its resources, such as labor and capital, are fully employed. Statement 4 is a standard definition where Real GDP per capita is derived by dividing the total Real GDP by the country's population to measure average economic well-being [2].

Sources

1. [1] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 2: National Income Accounting > 2.4 NOMINAL AND REAL GDP > p. 29
2. [2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 1: National Income > Real versus Nominal GDP > p. 7
3. [3] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 1: National Income > CHAPTER SUMMARY > p. 17