Editing Real and nominal value (section)

==Real wages and real gross domestic products==

The bundle of goods used to measure the [[Consumer Price Index]] (CPI) is applicable to consumers. So for wage earners as consumers, an appropriate way to measure real wages (the buying power of wages) is to divide the nominal wage (after-tax) by the growth factor in the CPI. [[Gross domestic product]] (GDP) is a measure of aggregate output. Nominal GDP in a particular period reflects prices that were current at the time, whereas real GDP compensates for inflation. Price indices and the U.S. [[National Income and Product Accounts]] are constructed from bundles of commodities and their respective prices. In the case of GDP, a suitable price index is the [http://bea.gov/bea/glossary/glossary.cfm?key_word=GDP_price_index&letter=G#GDP_price_index GDP price index.] In the U.S. National Income and Product Accounts, nominal GDP is called ''GDP in current dollars'' (that is, in prices current for each designated year), and real GDP is called ''GDP in [base-year] dollars'' (that is, in dollars that can [[GDP deflator#Calculation|purchase]] the same quantity of commodities as in the base year).