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What is the difference between real GDP and nominal GDP?

What is the difference between real GDP and nominal GDP? Does GDP accurately reflect our nation's productivity? Why or why not? Is there a relationship between GDP and the business cycle? If so, what relationship exists and how might a business manager use this information to increase their profits?

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Real GDP is discounted to account for inflation while nominal GDP isn't. As a result real GDP growth is lower than nominal GDP growth from one year to the next. GDP is an approximation of our nation's productivity. GDP itself is the market value of all final goods and service produced in a country. The GDP might not take into account black market products that never make it into the ...

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