Explain Real GDP and Nominal GDP.
Answer (1)
20th Jan, 2023
Nominal GDP is defined as the estimation of the economy’s total production in an economy, including the current prices in the calculation of GDP. In Nominal GDP, all finished goods and services are valued at the prices at which they are sold during the year.
In Real GDP, GDP value can take the measure of adjustment of inflation. It reflects goods and services produced in an economy produced at constant prices in the year, this saves from the impact of fluctuation in prices of goods and services every year due to inflation and deflation.
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