Real GDP
Real GDP or GDP at constant price is a very
useful index to
measure real or actual growth of an economy. It is
defined as the volume of current output at some basic prices. It is obtained by
multiplying the goods and services produced in the current year, with the
prices prevailing in the base year or constant year.
GDP at constant prices is also called real GDP. Base
year or current year is a stable year. It is carefully selected as one in who is
there are no natural calamities like floods earthquake drought epidemic or wars. The prices remain stable through the year. At present the base year in India is
1999 - 2000. Each year every country calculates GDP at constant prices. To
estimate GDP at constant prices,multiply the value of all final goods and
services produced in the current year with prices prevailing in current year.
This estimate is a reliable index of economic
growth of country. GDP at constant price
will increase only when there is rise in the output of goods and services in
the country during a another word if output of final goods and services rises
in a particular and prices are taken to
be constant As given by constant year GDP at constant price will write it
implies economic growth a high rate of economic growth improve the
standard of living of people.
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