# What is current GDP in dollars?

Current GDP in dollars, or simply current GDP, is a way of understanding the most recent calculation of Gross Domestic Product (GDP) in dollars for the current year. Sometimes referred to as nominal or chain dollar GDP, comparing current GDP to nominal gross domestic product from other years will not take into account the relative value impact of inflation unless those other years are also converted into current dollars. .

Unlike current dollar GDP, real GDP takes into account changes in inflation when comparing two or more years. This, in fact, facilitates the comparison, as it is possible to identify the true value of the Gross Domestic Product generated. For example, if the current dollar GDP for the most recent calendar year indicated a 10% increase over the previous year, but the inflation rate was 4%, the end result would be a "real" increase in GDP. 6%.

While the current dollar or nominal GDP does not account for changes in the rate of inflation from one period to the next, knowing the number can still be useful in a number of ways. First, the current dollar calculation represents the market value of goods and services produced in the considered economic period. In other words, the figure represents the reality of the value of goods at the time they were produced. Knowing this number is helpful in understanding exactly what was happening in a given economy at the time. Often, this information can help explain economic trends that emerged in later periods and why they occurred.

Another benefit of knowing current GDP in dollars is that it forms the basis for comparing the actual or actual amount of growth that has occurred between two different economic periods. By dividing current GDP in dollars by what is known as the GDP deflator, it is possible to allow for changes in the rate of inflation between two different years. This allows comparisons of the Gross Domestic Product of two different periods in terms that actually show the relative value of goods and services between the two periods. It also helps to show whether there has really been growth in the economy.

For example, suppose the most recently completed business period is identified as Year A, while the previous business period is referred to as Year B. If nominal or current GDP, Year A GDP is \$100 billion in US dollars. United States and the GDP deflator is 5%, which makes real GDP for the year A\$95.24B USD. If the current GDP of year B reached \$92 billion, then true economic growth has occurred. However, if year B had nominal or current GDP of \$96B USD, this formula will reveal that the economy declined even though there was an increase in current dollar GDP from year B to year A.

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