Question

What is the difference between a series of economic data over time measured in nominal terms versus the same data series over time measured in real terms?

Short answer

A series of economic data over time measured in nominal terms allows the currency value to fluctuate whereas that measured in real terms remains unchanged.

Step-by-step solution

Step 1. Nominal value

The value that is expressed in monetary terms is known as the nominal value. It permits currency values to vary.

Step 2. Real value

Real value is calculated by subtracting the effects of price fluctuations from the nominal value.

Step 3. Example

For example, if inflation rises, prices will rise as well. As a result, nominal wages will increase while real wages will remain unchanged.