What Is The Difference Between Nominal Gdp And Real Gdp

Gross Domestic Product (GDP) is a key economic indicator used to measure the size and health of an economy. Nominal GDP measures the value of economic output at current market prices, while Real GDP measures the value of goods and services produced by an economy, adjusted for inflation.

Nominal GDP takes into account the changes in prices due to market forces while Real GDP eliminates the effects of inflation. This means that Real GDP is a more accurate measure of the true growth of the economy, while Nominal GDP is more useful for comparing different economies. For example, if the nominal GDP of a country is higher than another country, this does not necessarily mean that the economy of that country is larger or healthier, as it could be due to higher prices. Real GDP measures the output of goods and services, taking into account the effects of inflation.