If nominal Gdp
= $4.5 trillion and the
Gdp deflator is 150, then real Gdp is equal to 3 trillion. According to
investopedia, “GDP stands for gross domestic product and is the measure of the
total economic output of the goods and services of a country. GDP is usually
expressed on an annual basis, but is sometimes expressed on a quarterly basis
within a year”. While Real GDP is defined as “equal to the economic output adjusted for the
effects of inflation. Nominal GDP is economic output without the inflation adjustment”.Lastly,
Nominal GDP is defined as usually higher than real GDP because inflation is
typically a positive number. Nominal GDP is used when comparing different
quarters of output within the same year. When comparing the GDP of two or more
years, real GDP is used because, by removing the effects of inflation, the
comparison of the different years focuses solely on volume.
