Nominal gross domestic product is the sum of the price and quantity for each good or service in for a specific period of time. To calculate nominal GDP, an economist needs data with the price and quantity of goods, a calculator, and a computer for tabulation.
- Identify the goods and services in the economy
Calculations for nominal GDP begin with the collection of data. Options include using every good in the society to produce a number or taking a subset of the goods. Identification of the prices, quantity sold and the time period provides the data to complete the equation.
- Multiple price and quantity
The price times the quantity of each individual good sets the first part of the equation. The price and quantity come from the base year set by the U.S. Commerce Department.
- Add the result of each sum
Add the product of each good to find the nominal GDP of a single year. This answer gives the value of goods for an economy.
- Replicate the equation with a comparison year
Replication of the steps for another year provides a comparison to factor in inflation for real GDP. For nominal GDP over a period of years, each year is set to a different equation with a separate calculation for each good.