In your own words, what is the difference between "real GDP growth" and "nominal GDP growth"...

Question

Question

In your own words, what is the difference between "real GDP growth" and "nominal GDP growth" and why do we care?

Answer 1

Answer #1

Firstly let us understand the meaning of GDP

GDP that is gross domestic Product is the production of final goods and services within the boundary of a country in a financial year

It is generally measured on quarterly or yearly basis

GDP per capita is called standard of living for any economy

GDP is calculated in two ways that are real GDP and nominal GDP

Real GDP is calculated from the base price year

It is also inflation-adjusted

But if we talk about the nominal GDP then it is only calculated for the current year

So if we have to compare the values of any economy performance over the years then we have to look for the real GDP

Real GDP is a more reliable as compared to nominal GDP and most commonly used as well

Answer 2

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