Difference Between Nominal GDP and Real GDP
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Difference Between Nominal GDP and Real GDP:
GDP stands for gross domestic product and is the measure of the total economic output of the goods and services of a country. GDP is usually expressed on an annual basis, but is sometimes expressed on a quarterly basis within a year.Real GDP is equal to the economic output adjusted for the effects of inflation.Nominal GDP is economic output without the inflation adjustment.
Difference Between Nominal GDP and Real GDP
| Nominal GDP | Real GDP |
| Nominal GDP refers to the aggregate market value of the economic output produced in a year within the boundaries of the country Nominal GDP. | Real GDP refers to the value of economic output produced in a given period, adjusted according to the changes in the general price level. |
| Nominal GDP is the GDP without the effects of inflation or deflation . | Real GDP is the GDP adjusted with the effects of inflation or deflation. |
| Nominal GDP values the production of goods and services at current prices. | Real GDP values the production of goods and services at constant prices. |
| Nominal GDP is usually higher than real GDP because inflation is typically a positive number. | Real GDP is usually lower as compared to real GDP. |
| The actual picture of the economic growth cannot be seen easily with the help of nominal GDP. | The actual picture of the economic growth can be seen easily with the help of real GDP. |
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