Nominal GDP
GDP measured in current prices
Nominal Gross Domestic Product (GDP) refers to the value of all goods and services produced within a country’s borders during a specific period (usually a year), measured at their current market prices. It’s also known as current-dollar GDP as it doesn’t account for inflation.
Nominal GDP includes the effects of any price changes that may have occurred over the period, so if the country experiences inflation, the nominal GDP will increase even if the actual level of output remains the same.
Nominal GDP is often used as an indicator of the size and health of an economy, as it represents the total value of all economic activity within the country. It’s also used to compare the economic performance of different countries.
However, nominal GDP doesn’t provide an accurate picture of the real economic growth, since it can be distorted by price changes. To adjust for inflation, economists use the concept of real GDP, which removes the effects of changes in prices to give a clearer picture of the actual level of output in an economy over time.
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