Answer ( 1 )

  1. Since the Gross Domestic Product is a very broad measurement of the economy, there are many different ways to measure a country’s GDP. Thus, there are different types of GDPs, that can be used simultaneously to determine a country’s wealth.
    Nominal GDP

    This is a raw GDP measurement that doesn’t take in account any price changes. Therefore, it is not accounted for inflation.
    Real GDP

    This is the same GDP measurement, but it also takes in account the affects of inflation. It is calculated by multiplying a price deflator by the nominal GDP. Thus, if economy grew, but prices also grew by the same percentage, nominal GDP would show growth, while real wouldn’t. Real GDP is the most commonly used way to measure economic growth.
    GDP per capita

    This is the most common way to compare economies of different countries. Let’s say the US and China have the same GDPs (they don’t for now, but let’s assume so), but the US population is roughly four times less than China’s. Thus, average Chinese citizen gets a much smaller slice of the economic cake. This is why the economists usually divide Gross Domestic Product by the number of residents. It shows the country’s standard of living.

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