Real GDP vs - RealGDPvs.NominalGDP

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Real GDP vs. Nominal GDP  In order to deal with the ambiguity inherent in the growth rate of GDP, macroeconomists  have created two different types of GDP, nominal GDP and real GDP.  Nominal GDP is the sum value of all produced goods and services  at current  prices.  This is the GDP that is explained in the sections above. Nominal GDP is  more useful than real GDP when comparing sheer output, rather than the value of  output, over time.  Real GDP is the sum value of all produced goods and services  at constant  prices.  The prices used in the computation of real GDP are gleaned from a  specified base year. By keeping the prices constant in the computation of real  GDP, it is possible to compare the economic growth from one year to the next in  terms of production of goods and services rather than the market value of these  goods and services. In this way, real GDP frees year-to-year comparisons of output 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/13/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

Page1 / 2

Real GDP vs - RealGDPvs.NominalGDP

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online