What Is the Difference Between Real GDP and Potential GDP?

Potential GDP (Potential GDP) is also called potential output or potential national income. Potential GDP (that is, gross domestic product) refers to the maximum output that a country can produce under fully utilized economic resources within a certain period of time, that is, the country's domestic production under full employment gross product. The GDP here reflects the maximum output capacity during the period.

Potential GDP

GDP is the English abbreviation of Gross Domestic Product. It shows the sum of the market value of the final products (goods and services) produced in a country or region within a year, reflecting this country or this

In the course of economic operation, the actual output and potential output often appear inconsistent. This inconsistency is called

How to calculate potential GDP:

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Measuring the potential output of the economy plays an important role in formulating a suitable economic development strategy and accurately grasping the actual economic operating situation. In the short term, judge accurately

1. Potential GDP is GDP when the economy and society reach full employment.

2. Nominal GDP refers to GDP calculated at current prices.

3. Real GDP is the GDP calculated based on the price of a previous year as the base period.

Potential GDP is the GDP that can be achieved when a country's resources are fully utilized, and it indicates the potential of an economy. Real GDP is the GDP that is actually produced. If the potential GDP is equal to the actual GDP, it means that the potential of an economy is fully realized and the economy is in an ideal normal operating state. If the potential GDP is greater than the actual GDP, the economic potential is not realized, and resources are idle, it is economic contraction. However, if the potential GDP is less than the actual GDP, the economic development exceeds the potential, and the resources are overutilized, it will cause the economy to overheat. To determine whether the Chinese economy is overheating, the first step is to determine China's potential GDP, that is, how much China's growth potential.