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Real GDP or Nominal GDP which one is perfect to measure Economic activity of any country.

Real GDP or Nominal GDP which one is perfect to measure Economic activity?


GDP stands for Gross Domestic Product (it is the value of the goods & services produced in the country within a year) and it usually uses for any country in order to measure its economic situation. To answer the above question we first need to know about what real GDP is and what Nominal GDP is for this we must check out its definitions

Real GDP =
Real GDP is economic output measurement at macroeconomic level to know the price change position in the country for example measuring inflation and deflation.
Real GDP can also be defined as it’s an observation which includes measurement of inflation/deflation of goods & services produced in any country within given period of time.

Nominal GDP =
As compared with the Real GDP, Nominal GDP is about explaining the actual GDP without taking into account other factors or variables such as inflation
Nominal GDP do not explains the economic strength of the country because of the fact that it determines GDP without variables like inflation etc.


So according to the above definitions we can conclude that Real GDP can be used to measure the economic activity of the country in order to know its economic situation regarding GDP.

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