Real GDP and Real GNI
Measuring Economic Activity and Illustrating Its Variations
AO2·AO4
Syllabus requirement
Real GDP and GNI are adjusted for inflation using a price deflator to reflect constant prices.
Assessment objectives
AO2 Application and AnalysisAO4 Use of Appropriate Skills
Summary
This topic explains real GDP and real GNI as measures of national output that have been adjusted for inflation so they use constant prices. It describes the GDP deflator as the price index used to convert nominal GDP or GNI into real terms, and shows why real figures give more meaningful comparisons of economic activity over time. Understanding real versus nominal measures is essential for interpreting growth rates and changes in average incomes accurately.
