What Is Nominal GNP?

The nominal GNP is simply the nominal GNP, which refers to the gross national product is generally calculated using market prices for the current year. [1]

Nominal gross domestic product

GNP has nominal GDP and

Calculate the price level. The available price index is also called the compression factor. The deflation factor or deflator is calculated as:

GNP Price Index = Nominal GDP / Real GDP

Actual GNP = nominal GNP / GNP price index

Let us use the following table to grasp the calculation of the price index and the relationship between the nominal GNP and the actual GNP.

Table three-year base price index and actual GNP

years	Product unit price 2	Total products 3	Nominal GNP4 = 2x3	Price index 5 = 2) / base price	Actual GNP6 = 4/5
the first year	2	000	2000	2/5 = 04	5000
the second year	3	300	3900	3/5 = 06	650
The third year	5	500	7500	5/510	7500
fourth year	7	700	900	7/5 = 14	8500
fifth year	0	2000	20000	0/5 = 20	0000

It is assumed in the table that there is only one product in the national economy and the price in the third year is used as the base year price. It can be seen from the table that the actual gross national product in the first and second years before the base year is greater than the nominal gross national product in the fourth and fifth years after the base year due to the effect of excluding price changes. The actual gross national product is less than the nominal gross national product. It can be seen that only the actual gross national product after conversion can truly reflect the change in actual output. The gross national product of different years can be compared. For example, comparing the fifth year with the first year's GNP, from the unconverted nominal GNP, the fifth year's 20,000 is ten times the first year's 2000, but after conversion to the actual GNP, the fifth year's 10,000 is only twice the 5000 in the first year, which is the true comparison.