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The nominal value of a good is its value in terms of money.
Definition nominal vs real. In contrast with a real value a nominal value has not been adjusted for inflation and so changes in nominal value reflect at least in part the effect of inflati. A rough way of marking the distinction between real and nominal definitions is to say following locke that the former states real essence while the latter states nominal essence. The chemist aims at real definition whereas the lexicographer aims at nominal definition. If nominal value is the actual price then real value is what should have been the price.
A real definition is then a special case of a nominal definition since it can hardly be a definition if it is not put into words while a nominal definition may have no reference to reality but still be a definition such as a mermaid being half woman half fish. If data are adjusted for inflation then they are said to be real values. The real value is its value in terms of some other good service or bundle of goods. Nominal also refers to an unadjusted rate in value such.
Changes in value in real terms therefore exclude the effect of inflation. A real interest rate is adjusted to remove the effects of inflation and gives the real rate of a bond or loan. In economics nominal value is measured in terms of money whereas real value is measured against goods or services. A year of college costs about the value of a toyota camry.
It can mean small or far below the real value or cost such as a nominal fee. A nominal interest rate refers to the interest rate before taking inflation into. Nominal is a financial term that has several different contexts. The fisher effect states that the nominal interest rate is simply the sum of the real interest rate and expected inflation.
Real value refers to the nominal value when adjusted for inflation meaning they are adjusted for general price level changes over time. Nominal interest rate real interest rate expected inflation. A real value is one which has been adjusted for inflation enabling comparison of quantities as if the prices of goods had not changed on average.
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