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constant dollars - Investment & Finance Definition
In economics, dollars that are part of the base year. Constant dollars are used to adjust for the effects of inflation by converting economic information into a standard era dollar term, such as 1990 dollars. The gross domestic product reports (GDP) produced by the United States and other governments often list GDP in constant dollar terms. For example, GDP in the most recent quarter may show a growth of 2.5 percent, however in constant dollar terms the growth rate might only be 2.0 percent using a base year of 1990. In contrast, current dollars refers to the value of a dollar today. Current dollars have not been adjusted for the effects of inflation, and thus may not be useful for comparing economic activity in different time periods.