What is the difference between nominal and real variables? Give two examples of each.

Various types of economic activity disseminate huge amounts of data that need to be expressed in units for various economic purposes, such as economic calculations. Economic calculations are used by economists to determine the current state of the economy and make accurate forecasts for the future. A variable can be broadly classified as both nominal and real variables. Nominal variables can be described as those that are affected by inflation. Monetary units are used to express the magnitude of these variables. Wages, incomes, and nominal GDP are some examples of nominal variables. On the other hand, real variables can be defined as variables that are not affected by the effects of inflation. Physical units are used to express the magnitude of real variables. The number of goods, the population and the real GDP are some examples of real variables.

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