Nominal gross domestic product (GDP) is the total value of all goods and services produced in a country over a period of time, calculated using current market prices. It's also known as "current dollar" GDP.
Nominal GDP is calculated by multiplying the quantities of goods and services produced by their current market prices. It's used to compare GDP to other economic indicators that aren't adjusted for inflation, like debt.
Here are some things to note about nominal GDP:
• Doesn't account for inflation
Unlike other GDP measurements, nominal GDP doesn't adjust for inflation or deflation. This means that it can rise and fall with changes in price and economic output.
• Can inflate growth figures
Because nominal GDP doesn't remove the effects of rising prices, it can inflate growth figures. For example, a growing nominal GDP from year to year could be due to a rise in prices, rather than an increase in the number of goods and services produced.
• Not all productive activity is included
GDP doesn't include unpaid work, like that done at home or by volunteers, or black-market activities.
Real GDP is similar to nominal GDP, but it factors in price changes between periods.
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