Real Economic Growth Rate

The real economic growth rate is a measure of the growth of an economy after taking inflation into account. It is calculated by subtracting the inflation rate from the nominal growth rate. The nominal growth rate is the percentage change in the value of a country's gross domestic product (GDP) from one year to the next. The inflation rate is the percentage change in the prices of goods and services over the same period.

The real economic growth rate is an important indicator of the health of an economy. A high real growth rate indicates that the economy is expanding and that people are becoming wealthier. A low real growth rate indicates that the economy is stagnant or shrinking and that people are becoming poorer.

The real economic growth rate is also used to compare the performance of different economies over time. An economy with a high real growth rate is considered to be more prosperous than an economy with a low real growth rate.

The real economic growth rate is calculated using the following formula:

Real economic growth rate = Nominal growth rate - Inflation rate

For example, if the nominal growth rate is 5% and the inflation rate is 2%, then the real economic growth rate is 3%.

The real economic growth rate is a useful tool for understanding the health of an economy and for comparing the performance of different economies. However, it is important to note that the real economic growth rate can be affected by a number of factors, including changes in government policy, economic conditions, and natural disasters.