Nominal GDP?

Business & Management
#1

Gross domestic product at current market prices is referred to as nominal GDP. The monetary worth of all products and services generated in a country is measured by GDP. Nominal GDP varies from real GDP in that it takes into account price changes due to inflation, which measures the rate at which prices rise in a given country. In other terms, it does not account for inflation or the rate at which prices rise, both of which might overstate the growth rate. The prices at which all products and services are counted in nominal GDP are the prices at which they are actually sold in that year.

#2

Nominal gdp leaves out price changes in their measurement.Therefore, usually nominal gdp is more than real gdp.

To calculate real gdp-

Real gdp=nominal gdp/ deflator

Deflator shows change in price level with respect to a base year.
Example-

Change in price level wrto base year is 5% . Then deflator= 1.05
If nominal gdp= 1000.
Then real gdp= 1000/1.05
real gdp= 952.38