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Real and Nominal GDP

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Research and identify the current levels of the real and nominal GDP, the unemployment rate, the inflation rate and the key interest rate. Relate these variables to the current state of the economy. What is the forecast for these variables for the next 1-2 years? Choose a company that you are familiar with or that you work for and identify how these variables affect it.

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As per Yahoo, "Gross Domestic Product (GDP) is the broadest measure of economic activity. Annualized quarterly percent changes in GDP reflect the growth rate of total economic output."1 GDP indicates the value addition done by the economy during a particular period. GDP further can be categorized in two types: Real and Nominal GDP. The GDP numbers are reported in two forms: current dollar (Nominal GDP) and constant dollar (Real GDP). As per economics.about.com, "The Nominal Gross Domestic Product measures the value of all the goods and services produced expressed in current prices. On the other hand, Real Gross Domestic Product measures the value of all the goods and services produced expressed in the prices of some base year."

Constant dollar GDP converts the current information into some standard era dollar, such as 2000 dollars. This process factors out the effects of inflation and allows easy comparisons between periods. Hence Real GDP gives an objective analysis of GDP as it makes inflation a constant factor. Real ...

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