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3 Tutorials that teach Nominal GDP versus Real GDP
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Nominal GDP versus Real GDP

Nominal GDP versus Real GDP

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Author: Colton Cranston
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This lesson covers nominal GDP versus real GDP.

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Terms to Know
  • GDP

    Gross Domestic Product; the sum of all final goods and services sold within a nation’s domestic borders; a measurement of economic activity.

  • Interest Rate Effect

    As interest rates fall, consumption increases due to the decrease in the cost of borrowing; as a result, purchases and business investment (Consumption, C, and Investment, I, respectively) both increase.

  • Nominal

    The value of an economic variable such as GDP, inflation, or prices in the current period; does not reflect changes in purchasing power (price level) over time.

  • Nominal GDP

    The value of GDP including the impact of inflation.

  • Price

    The cost of a good or service; nominal prices reflect the current or prevailing price for an item; real prices adjust for purchasing power variation over time (inflation).

  • Real

    The value of an economic variable such as GDP, inflation, or prices in the current period, adjusted for the change in purchasing power (price level) over time.

  • Real GDP

    Adjusts for inflation by restating nominal GDP in reference to a base year dollar value.