ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In short, nominal GDP measures the economic production at current market prices, whereas real GDP measures the economic production factoring in any prices changes in the market (deflation or inflation).

Detailed explanation-2: -This indicator is based on nominal GDP (also called GDP at current prices or GDP in value) and is available in different measures: US dollars and US dollars per capita (current PPPs).

Detailed explanation-3: -(ii) GDP at current prices can increase even when there is no increase in the flow of goods and services in the economy, but in the price level happens to rise. In contrast, GDP at constant prices will increase only when there is an increase in the flow of goods and services in the economy.

Detailed explanation-4: -Because the constant price GDP tells us more about whether the economy is growing, it is sometimes referred to as the real GDP, while the current price GDP is called the nominal GDP.

Detailed explanation-5: -Nominal GDP measures aggregate output (meaning the value of all of the final goods and services produced) using current prices.