Actual Output (Real GDP)
Actual output, also known as real gross domestic product (GDP), is a measure of the total value of goods and services produced in an economy over a given period of time. It is used to measure the economic performance of a country and is one of the most important indicators of economic health. Real GDP is adjusted for inflation, which means that it takes into account changes in the prices of goods and services over time. This makes it a more accurate measure of economic growth than nominal GDP, which does not account for inflation.
History of Actual Output (Real GDP)
The concept of real GDP was first developed by economist Simon Kuznets in the 1930s. Kuznets was looking for a way to measure economic growth that would be more accurate than the traditional measure of nominal GDP. He proposed adjusting GDP for inflation, which would give a more accurate picture of economic growth. This idea was adopted by the United Nations in the 1950s and has since become the standard measure of economic growth.
Comparison of Actual Output (Real GDP) and Nominal GDP
| Measure | Real GDP | Nominal GDP |
|---|---|---|
| Definition | Total value of goods and services produced in an economy, adjusted for inflation | Total value of goods and services produced in an economy, not adjusted for inflation |
| Accuracy | More accurate | Less accurate |
Summary
Actual output, or real GDP, is a measure of the total value of goods and services produced in an economy over a given period of time. It is used to measure the economic performance of a country and is one of the most important indicators of economic health. Real GDP is adjusted for inflation, which makes it a more accurate measure of economic growth than nominal GDP. For more information about actual output and other economic terms, you can visit websites such as Investopedia, The Balance, and the World Bank.
See Also
- Gross Domestic Product (GDP)
- Nominal GDP
- Inflation
- Economic Growth
- Gross National Product (GNP)
- Gross Value Added (GVA)
- Gross Fixed Capital Formation (GFCF)
- Balance of Payments (BOP)
- Consumer Price Index (CPI)
- Producer Price Index (PPI)
