what is the difference between nominal GDP,real GDP and potential GDP?

Question

best answer will get 10 points...(lame...haha)

Answer 1

Nominal GDP:
The GDP in that year's prices. For example, the 1981 GDP in 1981 dollars. Thus nominal GDP does not account for inflation.

Real GDP:
The number reached by valuing all the productive activity within the country at a specific year's prices. When economic activity of two or more time periods is valued at the same year's prices, the resulting figure allows comparison of purchasing power over time, since the effects of inflation have been removed by maintaining constant prices.

GDP, or Gross Domestic Product is the value of all the goods and services produced in a country. The Nominal Gross Domestic Product measures the value of all the goods and services produced expressed in current prices. On the other hand, Real Gross Domestic Product measures the value of all the goods and services produced expressed in the prices of some base year. An example:

Suppose in the year 2000, the economy of a country produced $100 billion worth of goods and services based on year 2000 prices. Since we're using 2000 as a basis year, the nominal and real GDP are the same. In the year 2001, the economy produced $110B worth of goods and services based on year 2001 prices. Those same goods and services are instead valued at $105B if year 2000 prices are used. Then:

Year 2000 Nominal GDP = $100B, Real GDP = $100B
Year 2001 Nominal GDP = $110B, Real GDP = $105B
Nominal GDP Growth Rate = 10%
Real GDP Growth Rate = 5%

Once again, if inflation is positive, then the Nominal GDP and Nominal GDP Growth Rate will be less than their nominal counterparts. The difference between Nominal GDP and Real GDP is used to measure inflation in a statistic called The GDP Deflator.

Answer 2

There is only price deflator in economics which means to delete the price effect from Nominal GDP. The nominal GDP will inflate itself. That's why to make a comparative analysis we have to deflate it.

Answer 3

http://www.ask.com/web?q=gdp&qsrc=1&o=333&l=dir