MANAGEMENT

Detailed explanation-1: -Constant or real dollars are terms describing income after adjustment for inflation. The Dictionary of Business and Economics defines constant dollar values and real income as shown below. Constant-dollar value (also called real-dollar value) is a value expressed in dollars adjusted for purchasing power.

Detailed explanation-2: -Inflation-adjusted expenditures. To accurately compare expenditures over time, nominal (or current) dollar values are adjusted to real (constant) dollars to account for inflation.

Detailed explanation-3: -Terms. Constant Dollars: weighted by a constant/unchanging basket/list of goods and services. Chained Dollars: weighted by a basket/list that changes yearly to more accurately reflect actual spending.

Detailed explanation-4: -The nominal value of any economic statistic is measured in terms of actual prices that exist at the time. The real value refers to the same statistic after it has been adjusted for inflation.

Detailed explanation-5: -Constant dollar accounting is a method for restating financial statements for the effects of inflation. Doing so achieves greater comparability between the financial statements associated with different accounting periods. The adjustment is usually made using the consumer price index.