Purchase Solution

Detailed Explanation with Example: Nominal and Real Quantity

Not what you're looking for?

Ask Custom Question

This is an important notion in economics which infuses several concepts dealing with money. We have "nominal" quantities and "real" quantities. For example, one would talk about the nominal price of a house as opposed to real price of the same house. Or one might talk about nominal deficit as opposed to real deficit.
What's the difference between nominal and real quantities and why make the distinction?

Please provide at least 100 words.

Purchase this Solution
Solution Summary

This solution gives a detailed explanation of the difference between nominal and real quantities, and illustrates the difference with an example based on the price of Big Mac in 1969 and 2012. The explanation is given 180 words.

Solution Preview

Problem: This is an important notion in economics which infuses several concepts dealing with money. We have "nominal" quantities and "real" quantities. For example, one would talk about the nominal price of a house as opposed to real price of the same house. Or one might talk about nominal deficit as opposed to real deficit.
What's the ...

Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

View More Free Quizzes
Related BrainMass Solutions

  • GDP, GNP, and GDP deflator

    Therefore, economic well-being rise more in 2012 The solution provides detailed explanation of the difference between GDP and GNP. It also walks through all the steps to compute nominal GDP, real GDP, GDP deflator, and their changes.

  • Quantity of money: Economics

    For example, the real interest rate is the nominal interest rate less the effect of inflation. The quantity of money affects inflation and the nominal rate of interest but it does not affect the real rate of interest.

  • Quantity theory of money and inflation

    This equation is a key component of the quantity theory of money, which offers an explanation between the money supply and inflation.

  • 4 Question about Aggregate Demand Curve

    What is the effect of an increase in the quantity of money? What is the difference between real variables and nominal variables? Are these variables affected by the quantity of money? If so, how? 2.

  • Nominal Versus Real GDP

    and nominal GDP in 1998 was $8,781.50 billion, calculate the percentage change from 1997 to 1998 in nominal GDP, real GDP, and the price level.

  • Break-Even Analysis, real GDP, and price elasticity

    The questions cover a wide range of economic topics, including Break-Even Analysis, GDP deflator, and price elasticity. The solutions include every step to each the final answers and provide detailed explanation.

  • annual inflation

    (example S/D diagram is attached) Nominal Yield - the formula between Nominal Yield (Rn), real rate of return (Rr) and inflation (i): Rn = (1+Rr)*(1+i) -1 Thus we know the nominal yields on US Treasury Bonds would decline from because real rate

  • Defining Economic Terms

    For example: real exchange rate measures the quantity of foreign goods that can be obtained in exchange for one domestic good. Similarly, other examples are real GDP, real interest rate, real wage etc.

  • Nominal rate and Fisher effect

    This solution is comprised of a detailed explanation of the Fisher effect and interest rates.

View More Related Solutions