AP Macroeconomics › How to find real GDP gross domestic product
In a certain year, nominal gross domestic product grew by 8 percent. The inflation rate was 4 percent. Real gross domestic product for this year was _______.
grew by 4 percent
grew by 8 percent
grew by 12 percent
remained constant
Nominal GDP growth refers to the rate at which real GDP increases. To find real GDP growth (i.e. GDP growth that accounts for inflation), subtract the inflation rate from the nominal GDP growth rate.
In this case, the nominal GDP growth rate is 8 percent, and the inflation rate is 4 percent. Thus, the real GDP growth rate is 4%.