Nominal GDP

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DEFINITION of 'Nominal GDP'

A gross domestic product (GDP) figure that has not been adjusted for inflation.

Also known as "current dollar GDP" or "chained dollar GDP."

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BREAKING DOWN 'Nominal GDP'

It can be misleading when inflation is not accounted for in the GDP figure because the GDP will appear higher than it actually is. The same concept that applies to return on investment (ROI) applies here. If you have a 10% ROI and inflation for the year has been 3%, your real rate of return would be 7%. Similarly, if the nominal GDP figure has shot up 8% but inflation has been 4%, the real GDP has only increased 4%.

 

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RELATED FAQS
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