Real Versus Nominal Value - Assignment Point
Real Versus Nominal Value
Subject: Economics | Topics:

This article focus on Real Versus Nominal Value, where real value is obtained by removing the effect of price level changes from the nominal value of time-series data, so as to obtain a truer picture of economic trends. For example, if personal income is $50,000 year 1 and $52,000 in year 2, but the rate of inflation is 3%, then the nominal growth rate of income is 4%, while the real growth rate is 1%. Nominal value is an often arbitrarily assigned amount used to calculate the dollar accounting value of a company’s stock for balance sheet purposes par value is the term commonly used in this context. It represents the amount that must be repaid at maturity, for bonds and preferred stock.

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