Explain the difference between a nominal value and a real value
What will be an ideal response?
A nominal value is the actual price that is paid or the actual wage received. If today you pay $1 for a can of Pepsi, this amount is a nominal value. A real value is adjusted for changes in the price level. To compare prices or wages across years, the nominal values need to be converted to real values. In other words, you need to compare values in the same dollars. This conversion is necessary because a dollar today is not worth the same as a dollar 20 years ago.
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The profit earned by a monopolistic competitor after the entry of new firms is ________
A) higher than the profit earned by the firm before the entry of new firms B) lower than the profit earned by the firm before the entry of new firms C) equal to the profit earned by a monopolist in the long run D) higher than the profit earned by a perfect competitor in the long run
According to Keynesian macroeconomists, prices adjust ________ to shocks, so the government should ________
A) slowly; do little B) rapidly; do little C) rapidly; fight recessions D) slowly; fight recessions