What Is Real GDP?

What Is Real GDP?

Real Gross Domestic Product is an inflation-adjusted measure of the value of economic output. Unlike GDP, real GDP is adjusted for price changes, which means it reflects the true growth of the economy.

Real GDP is a fine example of the distinction made in economics between real and nominal values. To adjust for inflation, real GDP is calculating using the same base prices from a given year instead of changing like the nominal GDP. The value is usually expressed as a percentage. In economics, real GDP per capita is used to measure the individual purchase power. This is a result of dividing the real GDP by the population size.