Question

What is the difference between real and nominal GDP?

Answer 1

Answer:

The main difference between nominal GDP and real GDP is the adjustment for inflation. Since nominal GDP is calculated using current prices, it does not require any adjustments for inflation. This makes comparisons from quarter to quarter and year to year much simpler, though less relevant, to calculate and analyze.

Answer 2

Real GDP

Nominal GDP doesn’t take into account the effect of inflation.

Real GDP is adjusted to consider inflation as well.

It is expressed in current prices.

It is expressed in constant prices or base-year prices.

Nominal GDP usually has a higher value

Real GDP rates are typically lower than nominal ones.

Nominal GDP can be useful in comparing different quarters of the current year or contrast the economic health of multiple different countries.

Real GDP is useful in comparing two or more financial years, and, therefore, it allows you to analyze the economic growth of a country over time.

Explanation: