Thursday, December 6, 2012

In macroeconomics, what is the difference between nominal GDP and real GDP?

The gross domestic product or GDP is the value of all the
goods and services produced in a country. GDP can be expressed in two ways. One is by
using the current costs of all the goods and services produced in the country. This is
called the nominal GDP. This is equivalent to the prices that you would pay if you
bought the goods or services today.


GDP can also be
expressed as the cost of the goods and services produced in a country but at the prices
they had in a particular year which is taken to be the base year. If there no inflation
the nominal and real GDP will remain the same, else the two
vary.

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