Nominal GDP vs Real GDP | Know the Top Differences!

Nominal GDP vs Real GDP | Know the Top Differences!


hello everyone hi welcome to the channel
of Wallstreetmojo to know more about this video nominal GDP versus real GDP
watch the video till the end and also if you are new to this channel then you can
subscribe us by clicking the bell icon that’s given below well today we have a
topic with us as called the nominal GDP versus real GDP
it’s a macroeconomic basic topic and we are trying we’ll we’ll be learning with
the help of an infographics the differences between the same.To begin
with let me just give you a short summary that what we are going to do.
We are going to learn the differences between nominal versus real GDP do you
process some of the infographics will help us to gain more confidence over the same some of the key differences and what role plays around
when we talk about nominal versus real GDP what are the complexities which
is more popular the value over the same and which is a which is a
growth-oriented a GDP so based on this let’s begin our
today’s topic and if you are let’s say if you are involved in a business ok and
as a business owner as a customer you should know about the nominal and real
GDP both of this concepts are important because on the basis of this you make
important decisions about buying and selling before talking about the nominal
and real GDP it’s important that you know about the gross domestic product of a country. Now it’s simple terms GDP means the total finished goods the total
finished good and the services that is produced within the country during a
particular period that means GDP is a price tag that the about the economy’s
total market value during the particular period now her out it will be calculated
GDP is basically your consumption C plus C stands for your spending during the
particular period plus G is the stands for government spending
plus I stand for businesses capital spending and post that there is
NX which stands for net exports which can be further disruptions export minus
import so now let’s talk about nominal versus real GDP see nominal GDP is the
GDP which is calculated at the let me write it nominal GDP it is calculated at
the current market price that means nominal GDP is expressed all the recent
changes in the market now if we talk about real GDP on the other hand is
calculated by taking the base year taking the base year as a determinant like
for example if we need to calculate the real GDP 2016 and if you would take
2010 is a base year the we would calculate the real GDP by taking all the
quantities of the goods and services and finished goods and then we’ll multiply
with the price of the 2010. Well in this tutorial we’ll look at both of this
nominal versus real GDP in a much more detailed format we’ll do a comparative
analysis between them so let’s begin with the same right now. First let’s
start with the mean see if you see the nominal GDP is the sum total of the
economic output that is produced during the year and it is valued at the current
market price so it is the sum total of the economic output that has been
produced that real GDP is the sum total of economic output that is
producing a value in year values at a predetermined base market price at a
predetermined base market price it is based on the current market price it is
based on the base market price see here’s the difference now how inflation
affects it? Nominal GDP does not take inflation into account and real GDP takes
inflation into account it is called as the inflation adjusted GDP. The value of
the GDP it is much higher since the current
market price are taken into account absolutely it’s gonna be high and here
it is based on the market price base year market price so it is much lower since
the market price of the base year is taken into consideration the popularity this
is less popular based on current market price this is more
popular real GDP because it is based on base year price what is the complexity
that is involved nominal GDP is very easy to compute well real GDP is little
bit complex to a certain comparison with your earlier GDP
normal GDP can be compared with the previous quarter
real GDP can be compared with the previous financial year see if quarter
comes in a picture here financial year comes in the picture.Growth in the
economy from the nominal GDP the economic growth cannot be analyzed from nominal GDP the economic growth cannot be easily be analyzed it it is little
complex well this can be analyzed very easily less complex because it’s easy to
a certain things well so let me quickly get down to the basis of comparison that
we learned the nominal GDP and then the real GDP the basis first was the meaning
quickly nominal GDP is a sum total of the economic output produced in the year valued at the current market price CMP and this is valued at the base market price second is what exactly it is based on it is based on the CMP it is based on
the base year market price okay how inflation affects the whole thing in
normal GDP does not take inflation into account it takes inflation into
account then the value of the GDP it is much higher since the current
market changes are taken into account it is much lower since the market price
with a base year is taken into consideration what is in what is in case
of the popularity nominal GDP is less popular this is more popular then comes
the complexity nominal GDP is very easy to compute real GDP is bit complex to
ascertain and then comes the comparison nominal GDP compare can be compared with the previous quarter real GDP can be compared with the
previous financial year and finally the growth
from nominal GDP the economic growth cannot be analyzed easily from real GDP
the economic growth can be analyzed easily so on the final concluding in
understanding the nominal GDP and real GDP are both very important but if you
want to understand the real thing reality of the things you need to know
how real GDP is calculated in real life. You can take many example from the
real life and create your own version of GDP doing this it will help you to
understand that the value of the nominal and the real GDP at same time you
would be able to perceive why government institution business talks about GDP in
all the context I hope you have got a fantastic idea about this particular
topic if you have learned and enjoyed watching this video please like comment
on this video and subscribe to our channel for all the latest updates thank
everyone once again for joining this session

Leave a Reply

Your email address will not be published. Required fields are marked *