Lil Mathew
BANNED
- Joined
- Aug 19, 2013
- Messages
- 1,151
- Reaction score
- -5
- Country
- Location
Dude, you have simply lost it! Nominal GDP actually relies on base years and is also termed as "GDP on current prices". There is nothing like "real gdp on current prices". "Real GDP" or "GDP on constant prices" comes by adjusting the nominal GDP with the inflation which as a result shrinks the total amount. That's the reason why Nominal GDP shows a higher figure than real GDP.
Nominal GDP relies on base year... From where you got this information ???
So you posted this much posts without knowing the basic difference between nominal and real gdp..It is not like that dude... I'll explain...
Nominal GDP Growth vs. Real GDP Growth
GDP, or Gross Domestic Product is the value of all the goods and services produced in a country. The Nominal Gross Domestic Product measures the value of all the goods and services produced expressed in current prices. On the other hand, Real Gross Domestic Product measures the value of all the goods and services produced expressed in the prices of some base year. An example:
Suppose in the year 2000, the economy of a country produced $100 billion worth of goods and services based on year 2000 prices. Since we're using 2000 as a basis year, the nominal and real GDP are the same. In the year 2001, the economy produced $110B worth of goods and services based on year 2001 prices. Those same goods and services are instead valued at $105B if year 2000 prices are used. Then:
Year 2000 Nominal GDP = $100B, Real GDP = $100B
Year 2001 Nominal GDP = $110B, Real GDP = $105B
Nominal GDP Growth Rate = 10%
Real GDP Growth Rate = 5%
Once again, if inflation is positive, then the Nominal GDP and Nominal GDP Growth Rate will be less than their nominal counterparts. The difference between Nominal GDP and Real GDP is used to measure inflation in a statistic called The GDP Deflator.
Dude, you have simply lost it! Nominal GDP actually relies on base years and is also termed as "GDP on current prices". There is nothing like "real gdp on current prices". "Real GDP" or "GDP on constant prices" comes by adjusting the nominal GDP with the inflation which as a result shrinks the total amount. That's the reason why Nominal GDP shows a higher figure than real GDP.
I'll give you some links ... Read this....
http://en.wikipedia.org/wiki/Real_gross_domestic_product
http://en.wikipedia.org/wiki/Measuring_GDP
http://www.diffen.com/difference/Nominal_GDP_vs_Real_GDP