Real GNP

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Real GNP

Gross national product after accounting for inflation. Comparing real GNP from year to year shows the amount an economy has grown or shrunk and how this actually affects the economy by determining how the buying power of money has been affected. Nominal GNP, on the other hand, does not account for inflation. For example, if the nominal GNP has grown 10% and the inflation rate is 3%, the real GNP growth is 7%. The real GNP measure is rarely used since the gross domestic product has become widely accepted.