Real Gross Domestic Product (GDP)
This inflation-adjusted measure that reflects the value of all goods and services produced in a given year, expressed in base-year prices. Often referred to as "constant-price", "inflation-corrected" GDP or "constant dollar GDP". Investopedia Says:
Unlike nominal GDP, real GDP can account for changes in the price level, and provide a more accurate figure.
Let's consider an example. Say in 2004, nominal GDP is $200 billion. However, due to an increase in the level of prices from 2000 (the base year) to 2004, real GDP is actually $170 billion. The lower real GDP reflects the price changes while nominal does not. Related Terms:
Aggregate Hours
Consumer Price Index - CPI
Deflation
Genuine Progress Indicator - GPI
Gross Domestic Product - GDP
Gross Nation Product - GNP
Inflation
Inflationary Gap
McCallum Rule
Nominal GDP |