Real gross domestic product

Relationship with nominal GDP

Real GDP is an example of the distinction between real and nominal values in economics. Nominal gross domestic product is defined as the market value of all final goods produced in a geographical region, usually a country; this depends on the quantities of goods and services produced, and their respective prices.

If a set of real GDPs from various years are calculated, each using the quantities from its own year, but all using the prices from the same base year, the differences in those real GDPs will reflect only differences in volume.

An index called the GDP deflator can be obtained by dividing, for each year, the nominal GDP by the real GDP, so that the GDP deflator for the base year will be 100. It gives an indication of the overall level of price change (inflation or deflation) in the economy.

GDP deflator for year ${\displaystyle t=\frac{NominalGD{P}_t}{RealGD{P}_t}\times 100}$

Real GDP growth on an annual basis is the nominal GDP growth rate adjusted for inflation. It is usually expressed as a percentage.

"GDP" may refer to "nominal" or "current" or "historical" GDP, to distinguish it from real GDP. Real GDP is sometimes called "constant" GDP because it is expressed in terms of constant prices. Depending on context, "GDP" may also refer to real GDP.