Real Gross Domestic Product (GDP)

Posted by Mr. P | Key Words | Monday 19 January 2009 5:47 PM

Real Gross Domestic Product (GDP) is the most accurate number for comparing the GDP of an economy between different years as it holds the price level constant.  It is calculated as the sum of the quantities of final goods by constant, instead of current prices, held at a base year.  For instance if the base year is 2000 then the real GDP for 2002 is calculated by multiplying the quanitity of goods and services sold for 2002 against the prices in 2000, then the GDP growth can be compared for 2000 to 2002 and if calculated the same way for 2001 and 2003, etc.  Real GDP is also known as GDP in terms of goods, GDP in constant dollars, GDP adjusted for inflation, and GDP in chain year.

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