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 economic performance of a country over time, while adjusting for inflation. This means that Real GDP gives a clearer picture of how much goods and services are actually produced, without the confusion caused by rising prices. For example, if a country produces more cars this year than last year, Real GDP will show that growth even if prices have also increased. This helps policymakers and economists understand if the economy is truly growing or just experiencing price increases. Overall, Real GDP is a vital tool for making informed decisions about economic policy and understanding the health of an economy.