ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the wage rate in euros.
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None of these answers are real variables.
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the price of corn.
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the nominal interest rate.
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the ratio of the value of wages to the price of soda.
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Detailed explanation-1: -A Real Variable is one where only an actual number is assigned as a value. In economics, real variables are variables that are adjusted for inflation. Examples include real GDP and real interest rates.
Detailed explanation-2: -Real variables are variables that don’t require the presence of an underlying monetary system for their representation.
Detailed explanation-3: -A basic tenet of macroeconomics and monetary economics is the difference between nominal variables and real variables. Nominal variables are expressed in current market prices. Real variables are adjusted to reflect the changing purchasing power of money over time (inflation or deflation).
Detailed explanation-4: -Definition: The nominal price of a good is its value in terms of money, such as dollars, French francs, or yen. The relative or real price is its value in terms of some other good, service, or bundle of goods. The term “relative price” is used to make comparisons of different goods at the same moment of time.