GDP evaluated at a set of constant (base-year) prices is called:

Real GDP is the value of all final goods and services produced in an economy during a year, measured at the prices of a fixed base year (constant prices). Because prices are held constant, any increase in real GDP reflects only an increase in the actual quantity of goods and services produced, not an increase in prices.

For this reason, real GDP is the correct measure for comparing the output of an economy over time and for calculating the economic growth rate. When the government announces that India's economy grew by, say, 6.5% in a year, it refers to the growth in real GDP.

Nominal GDP, on the other hand, is GDP measured at current prices, that is, the prices of the same year. Nominal GDP can rise even if output does not increase, simply because of inflation. For example, if prices double while output stays the same, nominal GDP doubles but real GDP does not change.

The two are linked by the GDP deflator:

Real GDP = (Nominal GDP / GDP deflator) × 100.

The base year is the year whose prices are used for calculating real GDP. It is revised periodically to reflect changes in the structure of the economy and new data sources. India's national accounts series had a base year of 2011-12 for a long time, and MoSPI has been moving it to a new base year, 2022-23.

Other related concepts:

• Potential GDP: the maximum output an economy can produce without causing inflation, when all resources are fully used.
• Green GDP: GDP adjusted for environmental damage and the depletion of natural resources.
• Per capita real GDP: real GDP divided by the population, often used as a rough measure of living standards.
• India is now the fourth-largest economy in the world by nominal GDP and the third-largest by purchasing power parity (PPP).

Why not the other options?

• ✗Nominal GDP is measured at current prices.
• ✗Potential GDP is the maximum sustainable output.
• ✗Green GDP adjusts for environmental costs.