Deffierence between Nominal GDP and Real GDP. Relation with Price index.

GDP = Consumer expenditure + Government expenditure + Investment + Net export

GDI = Wage + Rent + Net Interest + Profit


Let me explain Consumer Price Index (CPI) first.

CPI = current year price / base year price * 100

Assume that the product value never change,
CPI compares today money value and base year money value.

Along the same line, Nominal GDP means current year GDP,
and Real GDP translates Nominal GDP to base year money valued GDP

Real GDP = (Nominal GDP / CPI) * 100


It is easy to memorize if you think that Real = Base,
Nominal = Current   (same number of character)