Nominal GDP

AAA

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."

INVESTOPEDIA EXPLAINS '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%.

 

VIDEO

RELATED TERMS
  1. Nominal Interest Rate

    The interest rate before taking inflation into account. The equation ...
  2. Expenditure Method

    A method for calculating GDP that totals consumption, investment, ...
  3. Per Capita GDP

    A measure of the total output of a country that takes the gross ...
  4. Gross National Product - GNP

    An economic statistic that includes GDP, plus any income earned ...
  5. Real Interest Rate

    An interest rate that has been adjusted to remove the effects ...
  6. Real Rate Of Return

    The annual percentage return realized on an investment, which ...
Related Articles
  1. Understanding Supply-Side Economics
    Economics

    Understanding Supply-Side Economics

  2. Why The Consumer Price Index Is Controversial
    Economics

    Why The Consumer Price Index Is Controversial

  3. Explaining The World Through Macroeconomic ...
    Options & Futures

    Explaining The World Through Macroeconomic ...

  4. The Importance Of Inflation And GDP
    Economics

    The Importance Of Inflation And GDP

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center