The term “nominal” describes an economic metric that is not adjusted for inflation. For instance, nominal interest rate is the actual interest rate used in interest calculation, and which does not account for inflation rate. The real interest rate, on the other hand, is the nominal interest rate minus the inflation rate; this describes what the lender actually gains and what the borrower actually loses when accounting for inflation. In a similar vein, nominal GDP is GDP in current prices (without adjusting for inflation in the past years), while real GDP, using base-year prices for GDP calculation, more accurately reflects productivity of the economy since it is free of the pricing change caused by inflation.