What is a Constant Dollar GDP?
The constant dollar GDP is a way of measuring the gross domestic product in terms of inflation-adjusted dollars. This is important because the value of currency changes over the years. In order to truly understand a country’s GDP, it is important to establish a benchmark year. The constant dollar GDP is sometimes called the real GDP or inflation-corrected GDP. The constant dollar GDP’s opposite is the nominal GDP. The nominal GDP measures the gross domestic product, the value of all goods and services produced in a country, in the value of the currency for that particular year. While this may provide valuable information about a country’s economic condition over a short time frame, it provides very little usable information for comparison over time because it does not take into account the effects of inflation. This is why the constant dollar GDP is so important. The first step in determining the constant dollar GDP is to determine a baseline year. This will be the easiest year for whi
