National Income at Constant Prices: When national product is estimated on the basis of prices prevailing in the base year, it is called national income at constant prices or real national income.
National Income at Current Prices: When national product is estimated on the basis of prices prevailing in the current year, it is called national income at current prices or nominal national income.
National income at constant prices = (National income at current prices)/(Price index of current year) x Price index of base year
National income at constant prices reflects the real growth of an economy because it increases only when there is an increase in real national output over a period of time. National income at current prices may increase due to increase in prices of goods and services during the current year, thus it does not reflect the true picture of economic growth.
