What is the primary purpose of calculating Real GDP in an economy?

The primary purpose of calculating Real GDP, or Gross Domestic Product, is to measure the total value of all goods and services produced in an economy, adjusted for inflation. This means Real GDP gives us a clearer picture of economic growth over time because it reflects the actual increase in production rather than just changes in prices. For example, if a country produces more cars and the prices of cars rise due to inflation, nominal GDP might show a big increase, but Real GDP would show the true growth in production. By using Real GDP, policymakers can make better decisions about economic policies and understand whether the economy is truly improving or just experiencing rising prices. Overall, it helps us see how well an economy is doing in terms of real output and living standards.