Real vs. Nominal GDP
Real GDP is a measure of GDP in constant dollars of some base year, so as to eliminate the effect of inflation on the valuation of GDP.
Nominal GDP is a measure of GDP in current dollars, which includes inflation of prices over time.
A Simple Two-Good Example
Nominal GDP in 1992 = $.10 x 1,000 + $1.00 x 2,000 = $2,100.
Nominal GDP in 1999 = $.30 x 1,400 + $1.05 x 2,800 = $3,360.