If the economy grows at 10 percent from year one to year two and real GDP is 300 in year one, the real GDP in the second year will be 330, assuming that there is no change in the inflation in the economy.
What is the significance of a real GDP?
A real GDP of an economy is considered as the actual value of all the goods and services produced in an economy during any given financial year, wherein the amount is adjusted for inflation.
Assuming that there was no inflation in the economy, the real GDP, in the above condition, will become 330, (i.e., 300 + 10%) from year one to year two.
Therefore, the significance regarding the change in the real GDP has been aforementioned.
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