The term “nominal GDP” has two different meanings: one follows the standard economic term and the other does not, thus causing confusion.
In standard economic terms, "nominal GDP" refers to a country's GDP measured in its own currency unit and the current prevailing price in a specific year (or quarter, etc.). Therefore, Türkiye’s nominal GDP per capita in 2016 was 32,580 New Turkish Lira. Again, calling this number “nominal” just means it is represented in the current lira – i.e. the price in 2016.
Usually, "nominal GDP" is different from "real GDP" - the actual GDP is expressed as the current price of the previous benchmark year. Doing so allows us to distinguish to the extent to which the observed nominal GDP changes are caused by changes in the country’s final product and service output and to which extent to which the changes in price levels are reflected. To calculate real GDP, divide the nominal GDP for each year by the GDP deflating index—an index of the price level of that year relative to the price level of a base year. Take Türkiye as an example, the base year is 2009. Between 2009 and 2016, Türkiye's nominal per capita GDP grew by 12.8% per year, but its real per capita GDP grew much slower—5.0% per year. During this period, the remaining 7.8% of nominal GDP per year only reflects inflation.
In short, "nominal GDP" is the starting point for all other GDP calculations. Adjusted to changes in price levels, we get “real GDP” (total or per capita), the main indicator of economic growth in a particular country over a period of time.
The second way to use “nominal GDP” on Quora is as “GDP converted to US dollar at market exchange rate.” Here, the focus is not on the change in economic output of a particular country over time, but rather the relative size of two or more economies, usually measured at the same time point. The conversion of GDP to US dollars calculated at market prices is one of the basis for such comparisons. Another common basis for this comparison is the conversion of GDP to the United States. Purchasing Power Parity (PPP) exchange rate. Unlike market exchange rates that are affected only by cross-border flows of goods, services and financial assets, the PPP exchange rate takes into account the relative price levels of two or more countries, including untraded goods and (mainly) services internationally. The difference between the two exchange rates is mainly because services produced by unskilled labor (such as hairdressing, taxis and other local transportation, family and other personal services, construction, etc.) are much cheaper in poorer countries. This means that comparing the per capita GDP of different countries based on the market exchange rate often misleads the size of these economies. In particular, market exchange rate-based comparisons tend to make the economies of poorer countries appear smaller than their actual size compared to those of wealthier countries.
In contrast, the PPP based comparison between per capita GDP in different countries provides a more comprehensive, at least in my opinion, a more accurate measure of their relative size. Generally speaking, the use of purchasing power parity exchange rates tends to somewhat compress the huge differences in per capita GDP between rich and poor countries implied by using market exchange rates. For example, by market exchange rate, Türkiye's per capita GDP in 2016 was US$10,788, which was only 18% of the United States (US$57,467). By comparison, Turkey's per capita GDP rose to $24,244 when using the PPP exchange rate, more than twice the figure calculated using the market exchange rate and 42% of the corresponding figure in the United States.
