Why is it important to use real rather than nominal GDP figures when making comparisons of output across time periods? (1) The real figures will reflect changes in the quantity of output and not changes in the general level of prices. (2) The real GDP figures are a better measure of changes in the general level of prices. (3) The real figures will reflect changes in the general level of prices as well as changes in (4) The real GDP figures adjust for changes in the level of employment.

When comparing GDP across different time periods, it's essential to use **real GDP** rather than **nominal GDP**. Here's why each of the provided statements holds up: 1. **The real figures will reflect changes in the quantity of output and not changes in the general level of prices.** - **Correct.** Real GDP adjusts for inflation, allowing you to see the true growth or decline in the quantity of goods and services produced, independent of price changes. 2. **The real GDP figures are a better measure of changes in the general level of prices.** - **Incorrect.** Real GDP actually **removes** the effects of price changes to focus on output. It's the **nominal GDP** that is influenced by the general level of prices. 3. **The real figures will reflect changes in the general level of prices as well as changes in [incomplete].** - **Incomplete/Incorrect.** While the statement is incomplete, real GDP primarily focuses on output changes by adjusting for price level changes, rather than reflecting price level changes themselves. 4. **The real GDP figures adjust for changes in the level of employment.** - **Incorrect.** Real GDP adjusts for inflation, not directly for employment levels. Employment impacts are typically analyzed through other metrics like unemployment rates or labor productivity. **Conclusion:** - **Statement (1)** is the correct and primary reason for using real GDP over nominal GDP when making comparisons across time periods. **Answer:** Only statement 1 is correct; real GDP reflects output changes without being affected by price level changes.