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Real GDP
 
 
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Real GDP is a macroeconomic measure of the size of an economy adjusted for price changes and inflation. It measures in constant prices the output of final goods and services and incomes within an economy. The formula for its definition is [(Nominal GDP)/(GDP deflator
GDP deflator

In economics, the GDP deflator is a measure of the change in prices of all new, domestically produced, final goods and services in an economy. GDP stands for gross domestic product, the total value of all final goods and services produced within that economy during a specified period....
)] x 100, however, it is not calculated in this way. Real GDP is calculated as prices in the "base year" times quantities in the current year, such that production is held constant for the value of currency.

Real
Real versus nominal value

In economics, nominal value refers to any price or value expressed in money of the day, as opposed to real value, which adjusts for the effect of inflation....
 GDP
Gross domestic product

File:GDP nominal per capita world map IMF 2008.pngThe gross domestic product or gross domestic income is one of the measures of national income and output for a given country's economy....
 for a given year is the given year's nominal GDP stated in the based-year price level
Price level

A price level is a hypothetical measure of overall prices for some set of Good s and Service s, in a given region during a given interval, normalized relative to some base set....
.






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Real GDP is a macroeconomic measure of the size of an economy adjusted for price changes and inflation. It measures in constant prices the output of final goods and services and incomes within an economy. The formula for its definition is [(Nominal GDP)/(GDP deflator
GDP deflator

In economics, the GDP deflator is a measure of the change in prices of all new, domestically produced, final goods and services in an economy. GDP stands for gross domestic product, the total value of all final goods and services produced within that economy during a specified period....
)] x 100, however, it is not calculated in this way. Real GDP is calculated as prices in the "base year" times quantities in the current year, such that production is held constant for the value of currency.

Real
Real versus nominal value

In economics, nominal value refers to any price or value expressed in money of the day, as opposed to real value, which adjusts for the effect of inflation....
 GDP
Gross domestic product

File:GDP nominal per capita world map IMF 2008.pngThe gross domestic product or gross domestic income is one of the measures of national income and output for a given country's economy....
 for a given year is the given year's nominal GDP stated in the based-year price level
Price level

A price level is a hypothetical measure of overall prices for some set of Good s and Service s, in a given region during a given interval, normalized relative to some base set....
. Real GDP growth on an annual basis is the nominal and abnormal GDP growth rate adjusted for inflation and expressed as a percentage.

Because Real GDP is adjusted for changes in prices and inflation throughout the year, it can be thought of in terms of 'purchasing power.' As a result, individual purchasing power can be measured by Real GDP per capita, i.e., real GDP divided by the size of the population.

See also

  • Real versus nominal value
    Real versus nominal value

    In economics, nominal value refers to any price or value expressed in money of the day, as opposed to real value, which adjusts for the effect of inflation....