Gross domestic product (GDP)
The gross domestic product or GDP measures the market value of all final goods and services produced within an economy in a given period of time (according to the output definition), or equivalently, the aggregate income earned by all households, all companies, and the government within the economy in a given period of time (known as the income definition).
There are two kinds of GDP numbers prevalent — nominal GDP and real GDP. The nominal GDP measures the value of all goods and services produced at current prices, and does not take inflation (which leads to an erosion of the value of money) into account. Real GDP measures the value of all goods and services produced against that of an agreed-upon base year’s prices.
Here is a graph charting the difference between the two:-