except that it doesn't, look it up it is a very common issue for ATI graphics cards, i had the same issue with my monitor using 1680 x 1050 res when it is native 1920 x 1080, using the scaling options in the catalyst control centre as outlined worked.
Catalist control centre is the standard ATI controller driver that should be installed with your driver package, check your toolbar or control panel for it.
GPU (graphics processing unit) is your graphics card yes.
as for quality loss, i can't comment, make sure you are setting your resolution and aspect ratio to that of your tv, so 1920 X 1080 for full hd or 1280 x 720 for hd ready your resolution slider may not show these until you tell your card which tv you're using, the latest ATI driver (sorry amd now aren't they) should have a wide list of monitors and tv's listed.
pete