The Economy & the Fed

Real and Nominal GDP

Nominal GDP is the economy's output valued at today's prices. Real GDP takes out the effect of rising prices, so it shows whether the economy actually produced more, not just charged more. The headline growth rate is real GDP, at an annual rate: the quarter's change compounded as if it lasted a year. The gap between nominal and real growth is the GDP price index, also called the GDP deflator, the broadest measure of prices across everything the economy makes.

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