Real GDP Calculator
Strip inflation out of GDP: convert between nominal GDP, real GDP, and the GDP deflator from any two of them.
Dividing by the deflator ÷ 100 strips out price changes since the base year, where the deflator = 100.
Real GDP restates output in constant base-year prices with real GDP = nominal GDP ÷ (deflator ÷ 100). A nominal GDP of $21,000 with a deflator of 105 gives real GDP of $20,000 (21,000 ÷ 1.05). That $1,000 gap is pure price change — real GDP strips out inflation so only true output growth remains.
Real vs nominal GDP
Nominal GDP values a year’s output at that year’s prices, so it rises whenever prices rise, output rises, or both. Real GDP values the same output at the prices of a fixed base year, so it changes only when the quantity of goods and services changes. The bridge between them is the GDP deflator, a price index set to 100 in the base year. Dividing nominal GDP by the deflator ÷ 100 removes the price effect and leaves real, inflation-adjusted output.
The deflator is a price index with the base year = 100; rearranged, deflator = (nominal ÷ real) × 100 and nominal = real × (deflator ÷ 100).
Worked example
Take a nominal GDP of $21,000 and a GDP deflator of 105.
- 1 Start with nominal GDP. Nominal GDP = $21,000, measured in this year’s current prices.
- 2 Turn the deflator into a factor. Deflator ÷ 100 = 105 ÷ 100 = 1.05 — prices are 5% above the base year.
- 3 Divide to remove price changes. Real GDP = $21,000 ÷ 1.05 = $20,000, valued in base-year prices.
- 4 Check by rearranging. Deflator = (nominal ÷ real) × 100 = (21,000 ÷ 20,000) × 100 = 105. ✓
The three rearrangements
Any two of the three quantities give the third. The deflator is a price index equal to 100 in the base year, so there nominal GDP = real GDP.
| Solve for | Formula | Example |
|---|---|---|
| Real GDP | nominal ÷ (deflator ÷ 100) | 21,000 ÷ 1.05 = 20,000 |
| Nominal GDP | real × (deflator ÷ 100) | 20,000 × 1.05 = 21,000 |
| GDP deflator | (nominal ÷ real) × 100 | (21,000 ÷ 20,000) × 100 = 105 |
| Base year | deflator = 100, so nominal = real | 20,000 → deflator 100 → 20,000 |
Reading the results
Real GDP measures output, not prices. Because it holds prices fixed at the base year, a rise in real GDP means the economy actually produced more goods and services — the measure economists use for growth and for comparing living standards across years.
The deflator vs the CPI. Both track prices, but they cover different baskets. The GDP deflator covers everything counted in GDP — consumption, investment, government, and net exports — and its basket updates each year with output. The Consumer Price Index tracks a fixed basket of goods a typical household buys, and it includes imported goods that GDP excludes. The two usually move together but can diverge in any given year.