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When nominal GDP is less than real GDP is this inflation or deflation?
Wiki User
∙ 11y ago
deflation
Wiki User
∙ 11y ago
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What does it mean if real GDP were growing faster then nominal GDP?
It means that inflation is negative, also known as deflation.
How can an increase in nominal income and a decrease in real income occur simultaneously?
real income is the change with inflation taken into account, nominal income is purely the change of income therefore if inflation was to be 5% and nominal income increased by 2% there would be a real income decrease of 3%
The real wage will rise if the nominal wage?
The real wage is the amount of money paid when adjusted for inflation. This wage will rise if the nominal wage rises.
Real GDP is nominal GDP adjusted for inflation true or false?
yes
Suppose a borrower and lender agree on the nominal interest rate to be paid on a loan and the inflation turns out to be higher than they expected Is the real interest rate on this loan higher?
the real interest rate equals nominal interest rate minus inflation rate. In the situation the inflation rate increase and the nominal interest rate remains unchanged, therefore the real interest rate must decrease.
In a real economy which two factors can change the level of nominal GDP?
Inflation and Deflation
What does it mean if real GDP were growing faster then nominal GDP?
It means that inflation is negative, also known as deflation.
Can TVM be used to evaluate the real return or just the nominal return?
TVM, or Time Value of Money can certainly be used to calculate a real return. The only difference between a nominal return and a real return is inflation, so simply discount your future cash flows by anticipated inflation and you have a real return. In simpler terms assuming inflation is steady you could simply deduct inflation from your nominal return. For example a nominal 7% return with 3% inflation could be desribed as a 4% real return.
What is nominal interest?
Nominal InterestA nominal interest rate is the interest rate that does not compensate for inflation. This is used in relation to "effective interest rate" or "real interest rate."" Real Interest Rate = Nominal Interest Rate - Inflation Rate " Improvement suggested by Palash Bagchi.
How can an increase in nominal income and a decrease in real income occur simultaneously?
real income is the change with inflation taken into account, nominal income is purely the change of income therefore if inflation was to be 5% and nominal income increased by 2% there would be a real income decrease of 3%
The real wage will rise if the nominal wage?
The real wage is the amount of money paid when adjusted for inflation. This wage will rise if the nominal wage rises.
Real GDP is nominal GDP adjusted for inflation true or false?
yes
Nominal discount rate?
A nominal discount rate doesn't take into consideration inflation and other factors. Conversely, a real discount rate would already have inflation included in the rate. The nominal rate is the amount of discount that is state, whereas, the real discount is the actual amount that will be received.
Suppose a borrower and lender agree on the nominal interest rate to be paid on a loan and the inflation turns out to be higher than they expected Is the real interest rate on this loan higher?
the real interest rate equals nominal interest rate minus inflation rate. In the situation the inflation rate increase and the nominal interest rate remains unchanged, therefore the real interest rate must decrease.
What happens if inflation rises by just 1 percent?
The dollar in your pocket is worth .99 of a dollar. also nominal interest=real interest+inflation so nominal interest goes up by 1%
Real GDP?
a measurement of economic output minus the effects of inflation or deflation, gives a more realistic assessment of growth
What is nominal interest rate minus the expected rate of inflation?
The expected real interest rate.
