Why do real GDP and nominal GDP differ?

Real GDP and nominal GDP differ primarily because real GDP is adjusted for inflation, while nominal GDP is measured using current prices without accounting for changes in the price level. This means that real GDP provides a more accurate reflection of an economy's true growth by isolating changes in output, whereas nominal GDP can be influenced by price increases. Consequently, during periods of inflation, nominal GDP may appear higher than real GDP, potentially misrepresenting economic performance.