Econ Notes: Nominal and Real GDP, GDP Deflator

Nominal GDP (pq)
value of output produced in current prices
Can increase from year to year if either output or prices increase
economic growth

Real GDP (pq)
value of output produced in constant or base year prices
Can only increase if output increases

GDP Deflator


(Nominal GDP / Real GDP) x 100

for years after the base year, GDP deflator is greater than 100
for years before the base year, GDP deflator is less than 100

Below is a great video explaining how to calculate real and nominal GDP:

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