MEA-1.I—Define nominal GDP and real GDP

Define nominal GDP and real GDP.

• Nominal GDP is a measure of how much is spent on output. Real GDP is a measure of how much is produced.
• Nominal GDP measures aggregate output using current prices. Real GDP measures aggregate output using constant prices, thus removing the effect of changes in the overall price level.
• Enduring understanding MEA-1: An economy’s performance can be measured by different indicators such as gross domestic product (GDP), the inflation rate, and the unemployment rate.