ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Nominal GDP is the value of GDP at the current prevailing prices. 3. Real GDP is evaluated at constant prices.

Detailed explanation-2: -Key Takeaways Real gross domestic product is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year. Real GDP is expressed in base-year prices and is often referred to as constant price, inflation-corrected, or constant dollar GDP.

Detailed explanation-3: -Nominal Gross Domestic Product (GDP) and Real GDP both quantify the total value of all goods produced in a country in a year. However, real GDP is adjusted for inflation, while nominal GDP isn’t. Thus, real GDP is almost always slightly lower than its equivalent nominal figure.

Detailed explanation-4: -Economists calculate real GDP by then adjusting the resulting nominal GDP to account for inflation by applying a GDP deflator or a price index, which measures inflation since the base year. In this case, the base year is a year separate from the one under study, but whose prices will be used to measure it.