AP MacroeconomicsMeasuring the Economy
Real GDP
Real GDP is the value of all final goods and services produced in a given year, evaluated at base-year prices to remove the effects of inflation.
It measures actual changes in output by holding prices constant, allowing for accurate comparisons of economic growth over time. Real GDP is the preferred measure for analyzing long-term economic trends and productivity.
Formula / Example
Real GDP = (Nominal GDP / GDP Deflator) × 100