The sum of all final goods and services sold within a nation’s domestic borders; a measurement of economic activity
The value of GDP including the impact of inflation
Adjusts for inflation by restating nominal GDP in reference to a base year dollar value.
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.
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).
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.
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.