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What Is the Difference Between Real and Nominal GDP and Why

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Essay

What is the difference between real and nominal GDP and why do economists make this distinction?


Definitions:

Retained Earnings

The portion of net income that is not distributed to shareholders but is kept by the company for reinvestment or debt payment.

End-Of-Period Spreadsheet

A tool used in accounting to compile all balances and adjustments at the end of an accounting period before the preparation of financial statements.

Journal Entry

A record in accounting that represents a transaction and its effect on various accounts, used to keep track of all business transactions in a company's books.

Revenues

Income generated from normal business operations and other business activities.

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