Real Gross Domestic Product (GDP)
📈 Investing
Quick Definition
Real Gross Domestic Product (GDP) measures the value of all goods and services produced by an economy, adjusted for inflation, over a specific period.
Formula
Real GDP = Nominal GDP / GDP DeflatorExamples
- 1If a country's nominal GDP increased from one year to the next, but its price level also increased due to inflation, the real GDP might show a smaller increase or even a decrease, indicating a stagnation or contraction in economic activity.
- 2During economic recovery, a country's real GDP often increases as more goods and services are produced and consumed, reflecting true economic growth.
- 3Comparing the real GDP of different countries helps in understanding which economies are actually growing faster, adjusting for differences in price levels and inflation.
- 4Governments use real GDP as a basis for policy making, such as deciding when to stimulate the economy or tighten fiscal policies.
Tags
GDPeconomicsinflationeconomic-indicatorsgrowth-measurement
Related Terms
Other terms you might find helpful
Economic Growth
Economic growth refers to the increase in the production of economic goods and services, compared from one period of time to another.
Fiscal Policy
Fiscal policy refers to the government's use of spending and taxation to influence the economy.
Inflation
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
Quick Info
Category:Investing
Difficulty:intermediate
Last Updated:6/20/2025