ECONOMICS

Detailed explanation-1: -The real economic growth rate removes inflation in its measurement of economic growth, unlike the nominal GDP growth rate. Real GDP can be calculated by adjusting nominal GDP by inflation. Real GDP can also be measured as a dollar or a percentage by calculating changes in real GDP from one period to the next.

Detailed explanation-2: -While nominal GDP by definition reflects inflation, real GDP uses a GDP deflator to adjust for inflation, thus reflecting only changes in real output. Since inflation is generally a positive number, a country’s nominal GDP is generally higher than its real GDP.

Detailed explanation-3: -Nominal GDP measures output using current prices, while real GDP measures output using constant prices. We can explore how price changes can distort GDP using a visual representation of GDP.

Detailed explanation-4: -Nominal GDP is the Gross Domestic Product without any effect of inflation. Real GDP is the inflation-adjusted GDP of a country. The Nominal GDP of a country is expressed in terms of current year prices of goods and services.

Detailed explanation-5: -Economic growth (GDP growth) refers to the percent change in real GDP, which corrects the nominal GDP figure for inflation. Real GDP is therefore also referred to as inflation-adjusted GDP or GDP in constant prices.