The abbreviation GDP stands for gross domestic product. The Nominal GDP is the value of the total products produced by a country with inflation taken into consideration. The Real GDP is the value of the total products based on the value of dollars in previous years. Nominal GDP changes with inflation rates. For example, if a country makes the same number of products, but the inflation rate in country leads to higher prices, then the Nominal GDP increases. The Real GDP, however, only changes if the production rate changes. The Real GDP is useful in comparing the current price of products to prices in previous years.
Instructions
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1
Find the current GDP deflator percentage for the country as calculated by the World Bank.
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2
Divide the GDP deflator by 100 and add one to the value. For example, the current GDP deflator for the United States (as of publication date) is 0.9 percent. So, (0.9/100) + 1 yields 1.009.
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3
Divide the nominal GDP by the value from Step 2 to yield the Real GDP. For example, if the Nominal GDP is $900,000, then the Real GDP is $900,000/1.009, or $891,972.