What distinguishes nominal GDP from real GDP?

Nominal GDP is distinct from real GDP primarily because it measures a country's economic output without adjusting for inflation. This means that nominal GDP reflects the current market prices for goods and services produced in an economy at the time of measurement. Consequently, it can be influenced by changes in price levels; for instance, if there is inflation, nominal GDP can appear to increase even if the actual quantity of goods and services produced remains the same.

In contrast, real GDP adjusts for inflation, allowing for a more accurate representation of an economy's true growth over time by reflecting the value of goods and services at constant prices. This adjustment helps isolate the effects of price changes from those related to actual increases in output.

This understanding emphasizes the importance of using real GDP for comparisons over time, as it provides a clearer picture of economic growth and the overall health of the economy beyond the fluctuations due to inflationary pressures. Other aspects mentioned in the question, such as the focus on domestic production or government spending, do not accurately pertain to the distinction between nominal and real GDP.