How this calculator works
Nominal GDP values output at the prices that prevailed in each period, so it rises when prices rise even if the quantity of goods and services does not. Real GDP removes that price effect by dividing nominal GDP by a price index and multiplying by 100. The result is measured in the constant dollars of the index's base year. It answers how much the economy produced, not what that output was worth at the time. Official real GDP uses chain-weighted indexes that update weights every period, which this simple division approximates.
Formula
Real GDP = nominal GDP / GDP deflator × 100. Rearranged, nominal GDP = real GDP × deflator / 100 and the deflator = nominal GDP / real GDP × 100. The deflator is an index with a base year of 100, not a percentage.
Worked example
Nominal GDP of $1,900 with a deflator of 126.6667 gives real GDP of $1,500 in base-year dollars. In a later year with nominal GDP of $2,100 and a deflator of 132, real GDP is $1,590.91.
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Frequently asked questions
Why divide by 100?
The deflator is stated relative to a base year of 100. Dividing a nominal amount by, say, 1.266667 converts current dollars into base-year dollars; multiplying by 100 after dividing by the index gives the same result.
What base year does the result use?
It uses the base year of the index you enter. If the index is rebased, the real GDP level changes but its growth rate does not, as long as both periods use the same vintage of the index.
Is chain-weighted real GDP the same?
Not exactly. Chain-weighted indexes update the weights for relative prices every period, so they avoid the substitution bias of a fixed base. For short intervals the difference is small; for long ones, use published chain-weighted real GDP.