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What is the composition of the GDP and how to compare nominal versus real values?

What is the composition of the GDP and how to compare nominal versus real values?

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Answer #1

The four main components of GDP are Consumption, business investment, government spending and net exports. GDP measures as the sum of all services and goods that are produced by the country.

Nominal gdp refers to the gdp based on the prices of the good when it was produced. Nominal GDP is not inflated or deflated.

Real gdp refers to the gdp that has been adjusted for inflation and measured in relation to the price index of the given year. Nominal GDP includes both prices and growth, while real GDP is pure growth.

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