Finance Question:
What is the difference between real money and nominal money?
Answer:
Nominal money is related to the measure of counting. Nominal figure is what is written on the bill. Where as real money relates to it is purchasing power.
Example:
If 10 units in nominal money can buy 2 chocolates in 1980 and 1 chocolate in 2000, in the same way, 10 units of nominal money is 10 units of real money in 1980 and 5 units of real money in 2000.
Example:
If 10 units in nominal money can buy 2 chocolates in 1980 and 1 chocolate in 2000, in the same way, 10 units of nominal money is 10 units of real money in 1980 and 5 units of real money in 2000.
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