Answer to Question #318906 in Macroeconomics for Nalyn

Question

Differentiate nominal GDP from real GDP.

Answer 1

Nominal GDP refers to the market values of goods and services an economy produces, accounted for through raw numbers in current dollars. It is therefore the total value of consumer and government spending, investments and net exports, without adjusting for inflation.

Real GDP refers to the total values of goods and services produced in an economy, but adjusting for inflation so as to reflect changes in real output.