I keep hearing "output" alot and even "real output" sometimes, do these terms has to do with Nominal or Real GDP" ? because i a confused and could not really find anything useful on the internet

Thanks in advance


In the UN System of National Accounts (SNA 2008), $$ \begin{aligned} \text{GDP} &= \text{Total Value-Added}, \\ \text{Output} &= \text{Total Production}. \end{aligned} $$

Since $\text{Value-Added} = \text{Production} - \text{Intermediate Consumption (IC)}$, we have $$\text{GDP} = \text{Output} - \text{Total IC}.$$

(IC refers to goods completely consumed as inputs during production.)


  1. As already noted in the other two answers, in practice, economists, journalists, and other writers often simply use the term output as a synonym for GDP, even though this is strictly speaking wrong (or at least inconsistent with SNA usage).

As stated in "National Accounts: A Practical Introduction" (UN, 2003):

GDP is sometimes called in economic textbooks "output" or "net output". However, output has a different meaning in national accounts.

  1. Contrary to what the other two answers may have suggested, the difference between GDP and output has nothing to do with home production. Instead and as shown above, the only difference between the two is IC.

  2. The term real in economics (usually) refers to whether the figures have been adjusted for inflation. This has nothing to do with the difference between GDP and output. For any year, we have

$$ \begin{aligned} \text{Real GDP} &= \text{Real Output} - \text{Real Total IC}, \\ \text{Nominal GDP} &= \text{Nominal Output} - \text{Nominal Total IC}. \end{aligned} $$

  1. The term net (contrasted with gross) in SNA refers to whether (or not) depreciation has been accounted for. So, $$\text{Net Domestic Product (NDP)} = \text{GDP} - \text{Depreciation}.$$

It would be somewhat strange to speak of net output (this would mean we've accounted for depreciation but not IC). And indeed SNA makes no use of this term.

But again, as in Note 1, net output is sometimes loosely (and wrongly) used as a synonym for GDP. But this is especially mistaken and confusing because such use of net seems to refer to whether IC has been accounted for, whereas in the SNA, net refers to whether depreciation (rather than IC) has been accounted for.


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