Nominal GDP vs PPP GDP
If someone asks you what's India's standing in terms of GDP, what will be your answer? (Image source: Wikipedia , 2019 ) Before answering you must ask whether it's in terms of PPP or Nominal GDP ? Let's start with basics and understand what is GDP ? Gross Domestic Product (GDP) is the total market value of all the finished goods and services produced within a country's border in a specific time period. Example: Say we live in a hypothetical country "Mi amor" and it has produced 10 chocolates worth Rs 10 each, and 15 cakes worth Rs 20 each in the year 2018. So the GDP of the country "Mi amor" in 2018 was: Rs 10*10 + Rs 15*20 = Rs 400. Now say "Mi amor" has produced 11 chocolates worth Rs 10 each and 16 cakes worth Rs 20 each in the year 2019. The GDP of the country in the year 2019 is Rs 11*10+16*20 = Rs 430. So, the GDP growth for the year 2019 is: (430-400)*100/400 = 7.5% (An increase in Rs 30 from the base year 2018