What is real and nominal GDP? Which one is considered a better indicator of economic growth? (2024)

Nominal GDPReal GDPIt is the current money value of allIt is the money value of all the final goods and servicesthe final goods and services producedproduced by normal residents in a year calculated atby normal residents during year.base year prices.It can change even when there is noIt will change only when there is a change in output change in output.of an economy.It is not a true indicator of economic growth. It is a true indicator of economic growth of a country.

Real GDP is a better indicator of economic growth because it can be compared with base year GDP. While nominal GDP cannot be compared to any previous year's GDP.

See Also

GDP Growth: What’s the Ideal GDP Growth Rate?6 Reasons Why Economic Development is Critical to a Region’s EconomyGDP and Standard of LivingWhat is the economy?