Nominal GDP is GDP evaluated at current market prices. Therefore
, nominal GDP wil include of the changes in market prices that have
occurred during the current year due to inflation or deflation.
Nominal GDP= GDP deflator.real GDP/100
Real GDP is GDP evaluate at the market price of some base
year.
GDP deflator --- Using the statistics on real GDP and nominal
GDP, one can calculate an implecit index of the price level for the
year. This index is called GDP deflator.
GDP deflator = nominal GDP/real GDP .100
The GDP deflator can be viewed as a conversion factor that
transform real GDP into nominal GDP. Note that in the base year,
real GDP is by definition equal to nominal GDP so that the GDP
deflator in the base year equal to 100.