Differentiate between nominal and real incone
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Nominal income is the income in terms of money "how many dollars have I earned?" Real income is income in terms of purchasing power "how much goods and services I can afford to buy?
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In economics, the nominal values of something are its money values in different years. Real values adjust for differences in the price level in those years. Examples include a bundle of commodities, such as Gross Domestic Product, and income. Nominal income is the income in terms of money "how many dollars have I earned?" Real income is income in terms of purchasing power "how much goods and services I can afford to buy?"
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