Anybody here can explain to me the difference between GDP nominal and GDP (PPP)?

These two that are most used to measure the country's wealth. What's the difference?


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What Girls Said 1

  • Lol college econ. Can't help you bro, failed that shiz twice

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What Guys Said 2

  • GDP NOMINAL is total figure

    Country X 10 million
    Country Y 10 million

    PPP is per captia
    Pop of X is 5 million people
    Pop of Y is 1 million people

    GDP PPP of X is 2
    GDP PPP of Y is 10

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    • Go with @WilliamWinslow - He sounds like he knows what he is talking about

    • PPP is Purchasing Power Parity, an adjustment based on the inflation rate. I just past my Macroeconomics and Microeconomics last two semesters, so I am pretty sure.

    • PPP is not just capita.. It's also for the total.. Per capita is different. There is also per for GDP nominal.

  • The first one is purely numerical, while the second considers the inflation.

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    • The second makes adjustment based one the inflation rate, while the first one does not.

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    • Because it can make "nice" data under some situations. For instance, if a (fictional) country's GDP (Nominal) is 25 billion dollars and its GDP (PPP) is only 10 billion dollars. Which method does its government want to use?

    • The nominal... but still why is it developing countries have bigger GDP PPP than it's GDP nominal? Developed countries Like Germany etc almost have the PPP and Nominal readings. I'm guessing it has something to do with common currency conversion. The dollars.

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