Talk:Real versus nominal value (economics)
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[edit] Example: Peppercorns
"A classic example is a peppercorn rent." I noticed this was deleted. Why? would the editor reponsible care to justify the deletion of this apparently useful illustration of the concept? TobyJ 15:13, 24 October 2005 (UTC)
[edit] Question
From the article: "versus real value which removes the effect of inflation" Shouldn't that read, "which adds the effect of inflation" or "which accounts for the effect of inflation"?
[edit] Classical economics
Real price refers to how much labor a good costs. This is in contrast to nominal price which refers to how much money a good costs. This terminology is used by Adam Smith. In inflation, the nominal price of a good would increase with the real price remaining the same. However, the real price of money would decrease as it is not able to purchase as much labor.
[edit] How does real GDP account for present market equilibrium?
Real GDP uses a base year price how can it account for market demand and supply?
- Say, due to better production technology, and higher demand, you managed to produce and to sell 130 computers this year, comparing to 100 computers last year. In real terms, "your product" (GDP) is 30% higher.
- But it's true that market forces affect prices and quatities simultaneously. Probably, article's language needs to be improved to avoid the misunderstanding. --Econn 06:54, 10 October 2006 (UTC)
- I removed the part on "market demand and supply" as not related, partially restoring one of the previous editions. Please check it out. --Econn 07:40, 10 October 2006 (UTC)
