Real GDP is calculated in a way such that goods and services are evaluated at some constant set of prices. Since these prices remain fixed, if the Real GDP changes we can be sure that it is the volume of production which is undergoing changes. Nominal GDP, on the other hand, is simply the value of GDP at the current prevailing prices.

If output in an economy is decreasing but G.D.P. of country is increasing, which G.D.P. it is?

Nominal G.D.P.

Real GDP, which is calculated using constant prices, measures the actual change in the volume of goods and services produced. Therefore, if real GDP is decreasing, it means that the economy is producing less.

Nominal GDP, on the other hand, is not adjusted for inflation. This means that it can increase even if the volume of production is decreasing, as long as prices are rising. Therefore, if output in an economy is decreasing but nominal GDP is increasing, it must be that nominal GDP is increasing.