ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Real GDP is nominal GDP adjusted for inflation. Real GDP is used to measure the actual growth of production without any distorting effects from inflation.

Detailed explanation-2: -The gross domestic product implicit price deflator, or GDP deflator, measures changes in the prices of goods and services produced in the United States, including those exported to other countries.

Detailed explanation-3: -However, prices can change even if output doesn’t change. Because of that, our measure of output might get distorted by something like inflation. We account for this using real GDP, which is a measure of GDP that has been adjusted for the price level. In this way, real GDP is a truer measure of output in an economy.

Detailed explanation-4: -Nominal GDP is GDP measured in current prices. It does not account for inflation from year to year. Real GDP is GDP expressed in constant, or unchanging, dollars. Real GDP adjusts for inflation.

Detailed explanation-5: -Real GDP is an inflation-adjusted calculation that analyses the rate of all commodities and services manufactured in a country for a fixed year. It is expressed in foundation year prices and referred to as a fixed cost price. It is also known as inflation-corrected GDP or constant price GDP.