Economics 101: What Is Real GDP? Learn How Real GDP Measures and How It Is Calculated
Written by MasterClass
Last updated: Oct 12, 2022 • 4 min read
Real GDP adjusts for inflation and is the most accurate portrait of an economy’s trajectory. By removing inflation as a variable, real GDP can tell economists if a nation’s economy is growing, shrinking, or remaining constant.
What Is Real GDP?
Real Gross Domestic Product, or real GDP, is the inflation-adjusted total economic output of a nation’s goods and services in a given period of time. Also known as “constant price GDP,” “inflation-corrected GDP,” or “constant dollar GDP,” real GDP is derived by isolating and removing inflation from the equation by placing value at base-year prices, making GDP a more accurate reflection of a nation’s economic output.