ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If the output does not change but price changes from one period to the next then the nominal GDP would change, irrespective of the change in output. Real GDP accounts for changes in prices due to inflation. Real GDP is actually nominal GDP that is just adjusted for inflation.

Detailed explanation-2: -Real gross domestic product (GDP) 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. It is often referred to as constant-price GDP, inflation-corrected GDP, 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.

Detailed explanation-4: -Nominal GDP is an assessment of economic production in an economy that includes current prices in its calculation. In other words, it doesn’t strip out inflation or the pace of rising prices, which can inflate the growth figure.