Real vs Nominal GDP Flashcards
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Flashcards for reviewing Real vs Nominal GDP
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5 Terms
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Nominal GDP
Values output using current prices and is NOT corrected for inflation.
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Real GDP
Values output using the prices of a base year and IS corrected for inflation.
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Nominal GDP Example Calculation
In 2011: $6,000; In 2012: $8,250; In 2013: $10,800
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Real GDP Example Calculation
In 2011: $6,000; In 2012: $7,200; In 2013: $8,400 (using 2011 as the base year)
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Key Difference between Nominal and Real GDP changes
Nominal GDP reflects both prices and quantities, while Real GDP reflects the amount that GDP would change if prices were constant (corrected for inflation).
Flashcards (75)