Macro Unit 2.6A- Nominal and Real GDP Advanced Placement Macroeconomics

Mr. Clifford introduces GDP, highlighting the challenges in calculating its dollar value due to inflation. He explains the difference between nominal GDP, which is not adjusted for inflation, and real GDP, which is adjusted using a base year. A visual comparison shows that nominal GDP appears to grow faster because it doesn't account for inflation, whereas real GDP provides a more accurate growth rate over time.

What is the difference between nominal GDP and real GDP?

What does the term 'base year' refer to in the context of real GDP?

How does nominal GDP behave over time compared to real GDP?

Explain the impact of inflation on the perception of economic growth.

Why is it important to adjust GDP for inflation?