Studied by 3 peopleReal GDP
GDP that is expressed in constant, or unchanging dollars. Some sort of base year and adjusts for inflation.
Nominal GDP
GDP that is measured in current prices. Does not account/adjust for inflation from year to year. Inflation is included.
Real GDP deflates Nominal by
adjusting for inflation in terms of base year prices.
ex: nominal may be steadly increasing but real could be going up with little pockets of down
Is nominal or real GDP better for measuring actual growth?
Real GDP
GDP deflator
measures the price of all goods produced
CPI
measures the prices of the goods and services only brought by consumers
An increase in prices by firms of the government will
show up in GDP deflation but not in CPI
GDP inflator only shows goods produced
domestically, imports do not count
GDP deflator=
Nominal GDP
____________ *100
Real GDP
Note
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