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Real GDP is an example of the distinction between real and nominal values in economics.Nominal gross domestic product is defined as the market value of all final goods produced in a geographical region, usually a country; this depends on the quantities of goods and services produced, and their respective prices.
Real value takes into account inflation and the value of an asset in relation to its purchasing power. In macroeconomics, the real gross domestic product compensates for inflation so economists can exclude inflation from growth figures, and see how much an economy actually grows. Nominal GDP would include inflation, and thus be higher.
GDP is the mean (average) wealth rather than median (middle-point) wealth. Countries with a skewed income distribution may have a relatively high per-capita GDP while the majority of its citizens have a relatively low level of income, due to concentration of wealth in the hands of a small fraction of the population. See Gini coefficient.
The nominal GDP of a given year is computed using that year's prices, while the real GDP of that year is computed using the base year's prices. The formula implies that dividing the nominal GDP by the real GDP and multiplying it by 100 will give the GDP Deflator, hence "deflating" the nominal GDP into a real measure. [1]
The most popular criticism of national accounts is made against the concept of gross domestic product (GDP). In part, this criticism of GDP is misplaced, because the fault is not so much with the concept itself. It is useful to have a measure of a country's total net output, and its changes over time – that's better than having no measure at all.
Nominal GDP does not reflect differences in the cost of living and the inflation rates of the countries; therefore, using a basis of GDP per capita at purchasing power parity (PPP) may be more useful when comparing living standards between nations, while nominal GDP is more useful comparing national economies on the international market. [9]
List of Chinese administrative divisions by GDP per capita; Historical specific. List of countries by GDP estimates for 2006 (nominal) List of countries by GDP estimates for 2007 (nominal) List of countries by past GDP (nominal) – for the years between 1998 and 2003; List of countries by past GDP (PPP) – for the periods between 1 CE and 1998 CE
The Penn World Table (PWT) is a set of national-accounts data developed and maintained by scholars at the University of California, Davis and the Groningen Growth Development Centre of the University of Groningen to measure real GDP across countries and over time.