Nominal vs. Real — What's the Difference?
By Tayyaba Rehman & Urooj Arif — Updated on May 16, 2024
Nominal values are measured in current prices without adjusting for inflation, while real values are adjusted for inflation to reflect purchasing power.
Difference Between Nominal and Real
Table of Contents
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Key Differences
Nominal values represent the monetary amount in today's terms, without accounting for changes in price levels over time. Real values, on the other hand, are adjusted for inflation, providing a more accurate representation of purchasing power.
Nominal values can be misleading when comparing over time, as they do not reflect changes in the value of money. Real values are adjusted to a constant base year, offering a clearer comparison by removing the effects of inflation. For instance, nominal GDP measures the value of goods and services at current prices, whereas real GDP adjusts these values to account for inflation.
Nominal values are straightforward and easier to calculate, but real values offer more meaningful insights into economic conditions by considering inflation. For example, a nominal wage increase might seem significant, but if inflation is higher, the real wage might actually decrease, reflecting reduced purchasing power.
In financial statements, nominal figures can show inflated growth due to rising prices, while real figures reveal true economic growth by stripping out inflation effects. Real values help in understanding the actual economic performance and living standards over time.
Comparison Chart
Definition
Measured in current prices without inflation
Adjusted for inflation to constant prices
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Price Level Adjustment
Not adjusted
Adjusted
Reflects
Monetary value in today's terms
Purchasing power
Example
Nominal GDP
Real GDP
Insights
Easier to calculate but less accurate over time
More accurate for economic comparisons
Compare with Definitions
Nominal
Not adjusted for changes in price levels.
The nominal interest rate on the loan is 4%.
Real
Represents value in constant prices.
Her real wage has increased due to lower inflation.
Nominal
Actual monetary terms as stated.
The nominal cost of the car is $20,000.
Real
Reflects changes in price levels.
The real interest rate is the nominal rate minus inflation.
Nominal
(of a role or status) existing in name only
Thailand retained nominal independence under Japanese military occupation
Real
Actually existing as a thing or occurring in fact; not imagined or supposed
Julius Caesar was a real person
Her many illnesses, real and imaginary
Nominal
(of a price or charge) very small; far below the real value or cost
They charge a nominal fee for the service
Real
(of a thing) not imitation or artificial; genuine
The earring was presumably real gold
Nominal
(of a quantity or dimension) stated or expressed but not necessarily corresponding exactly to the real value
EU legislation allowed variation around the nominal weight (that printed on each packet)
Real
Complete; utter (used for emphasis)
The tour turned out to be a real disaster
Nominal
Relating to or functioning as a noun
A nominal group
Real
Adjusted for changes in the value of money; assessed by purchasing power
Real incomes had fallen by 30 per cent
An increase in real terms of 11.6 per cent
Nominal
(chiefly in the context of space travel) functioning normally or acceptably.
Real
(of a number or quantity) having no imaginary part.
Nominal
Of, resembling, relating to, or consisting of a name or names.
Real
(of an image) of a kind in which the light that forms it actually passes through it; not virtual.
Nominal
Assigned to or bearing a person's name
Nominal shares.
Real
Really; very
My head hurts real bad
Nominal
Existing in name only; not real
“a person with a nominal religious position but no actual duties” (Leo Damrosch).
Real
The basic monetary unit of Brazil since 1994, equal to 100 centavos.
Nominal
Insignificantly small; trifling
A nominal sum.
Real
Being or occurring in fact or actuality; having verifiable existence
Real objects.
A real illness.
Nominal
(Philosophy) Of or relating to nominalism.
Real
True and actual; not imaginary, alleged, or ideal
Real people, not ghosts.
A film based on real life.
Nominal
(Economics) Of or relating to an amount or rate that is not adjusted for inflation.
Real
Of or founded on practical matters and concerns
A recent graduate experiencing the real world for the first time.
Nominal
(Business) Of or relating to the par value of a security rather than the market value.
Real
Genuine and authentic; not artificial or spurious
Real mink.
Real humility.
Nominal
(Grammar) Of or relating to a noun or word group that functions as a noun.
Real
Being no less than what is stated; worthy of the name
A real friend.
Nominal
Aerospace & Engineering According to plan or design
“The flyby was declared a success after the spacecraft phoned home to Earth at 8:53 p.m. EDT and all systems were nominal” (Emilee Speck).
Real
Free of pretense, falsehood, or affectation
Tourists hoping for a real experience on the guided tour.
Nominal
A word or group of words functioning as a noun.
Real
Not to be taken lightly; serious
In real trouble.
Nominal
Of, resembling, relating to, or consisting of a name or names.
Real
(Philosophy) Existing objectively in the world regardless of subjectivity or conventions of thought or language.
Nominal
Assigned to or bearing a person's name.
Real
Relating to, being, or having value reckoned by actual purchasing power
Real income.
Real growth.
Nominal
Existing in name only.
A nominal difference
Real
(Physics) Of, relating to, or being an image formed by light rays that converge in space.
Nominal
(philosophy) Of or relating to nominalism.
Real
(Mathematics) Of, relating to, or being a real number.
Nominal
Insignificantly small.
He gave me only a nominal sum for my services.
Real
(Law) Of or relating to stationary or fixed property, such as buildings or land.
Nominal
Of or relating to the presumed or approximate value, rather than the actual value.
The nominal voltage is 1.5 V, but the actual figure is usually higher.
The nominal yield of a nuclear weapon
Real
Very
I'm real sorry about that.
Nominal
(finance) Of, relating to, or being the amount or face value of a sum of money or a stock certificate, for example, and not the purchasing power or market value.
Real
A thing or whole having actual existence. Often used with the
Theories beyond the realm of the real.
Nominal
(finance) Of, relating to, or being the rate of interest or return without adjustment for compounding or inflation.
Real
(Mathematics) A real number.
Nominal
(grammar) Of or relating to a noun or word group that functions as a noun.
This sentence contains a nominal phrase.
Real
A silver coin formerly used in Spain and Latin America.
Nominal
(engineering) According to plan or design.
We'll just do a nominal flight check.
Apart from the slightly high temperature, all the readings from the spacecraft are nominal.
Real
A unit of currency formerly used in Portugal.
Nominal
(economics) Without adjustment to remove the effects of inflation.
My employer does not understand how low my nominal wage is.
The nominal GNP of this country is pretty low.
Real
See Table at currency.
Nominal
Having values whose order is insignificant.
Real
True, genuine, not merely nominal or apparent.
Nominal
(taxonomy) Of a species, the species name without consideration of whether it is a junior synonym or in reality consists of more than one biological species.
Real
Genuine, not artificial, counterfeit, or fake.
This is real leather.
Nominal
(grammar) A noun or word group that functions as part of a noun phrase.
This sentence contains two nominals.
Real
Genuine, unfeigned, sincere.
These are real tears!
Nominal
(grammar) A part of speech that shares features with nouns and adjectives. (Depending on the language, it may comprise nouns, adjectives, possibly numerals, pronouns, and participles.)
Real
Actually being, existing, or occurring; not fictitious or imaginary.
A description of real life
Nominal
A number (usually natural) used like a name; a numeric code or identifier. (See nominal number on Wikipedia.)
Numeric codes of characters used in programming are nominals.
Real
That has objective, physical existence.
No one has ever seen a real unicorn.
Nominal
A person listed in the Police National Computer database as having been convicted, cautioned or recently arrested.
Real
(economics) Having been adjusted to remove the effects of inflation; measured in purchasing power contrast nominal.
My dad calculated my family's real consumption per month.
What is the real GNP of this polity?
Nominal
Of or pertaining to a name or names; having to do with the literal meaning of a word; verbal; as, a nominal definition.
Real
(economics) Relating to the result of the actions of rational agents; relating to neoclassical economic models as opposed to Keynesian models.
Nominal
Existing in name only; not real; as, a nominal difference.
Real
Being either a rational number, or the limit of a convergent infinite sequence of rational numbers: being one of a set of numbers with a one-to-one correspondence to the points on a line.
Nominal
Within acceptable limits; as expected; as, the hydraulic lines are at nominal pressure; - used mostly in aviation and space operations.
Real
(legal) Relating to immovable tangible property.
Real estate;
Real property
Nominal
Insignificant; trifling; - of prices or costs, as compared with the benefits gained; as, to pay a nominal sum for the data; a nominal fee.
Real
Absolute, complete, utter.
This is a real problem.
Nominal
A nominalist.
Real
(slang) Signifying meritorious qualities or actions especially as regard the enjoyment of life, prowess at sports, or success wooing potential partners.
I'm keeping it real.
Nominal
A verb formed from a noun.
Real
Really, very.
When I told him the truth, he got real mad.
Nominal
A name; an appellation.
A is the nominal of the sixth note in the natural diatonic scale.
Real
A commodity; see realty.
Nominal
Relating to or constituting or bearing or giving a name;
The Russian system of nominal brevity
A nominal lists of priests
Taxable males as revealed by the nominal rolls
Real
(grammar) One of the three genders that the common gender can be separated into in the Scandinavian languages.
Nominal
Insignificantly small; a matter of form only (`tokenish' is informal);
The fee was nominal
A token gesture of resistance
A tokenish gesture
Real
(mathematics) A real number.
Nominal
Pertaining to a noun or to a word group that functions as a noun;
Nominal phrase
Noun phrase
Real
(obsolete) A realist.
Nominal
Being value in terms of specification on currency or stock certificates rather than purchasing power;
Nominal or face value
Real
Former unit of currency of Spain and Spain's colonies.
Nominal
Named; bearing the name of a specific person;
Nominative shares of stock
Real
A coin worth one real.
Nominal
Being such in name only;
The nominal (or titular) head of his party
Real
A unit of currency used in Portugal and its colonies from 1430 until 1911, and in Brazil from 1790 until 1942.
Nominal
Measured in current prices without adjusting for inflation.
The nominal GDP of the country increased by 5% this year.
Real
A coin worth one real.
Nominal
Face value without considering inflation.
Her nominal salary is $50,000 annually.
Real
A unit of currency used in Brazil since 1994. Symbol: R$.
Nominal
Expressed in current dollars.
The nominal value of the bond is $1,000.
Real
A coin worth one real.
Real
A former small Spanish silver coin; also, a denomination of money of account, formerly the unit of the Spanish monetary system.
Real
A realist.
Real
Royal; regal; kingly.
Real
Actually being or existing; not fictitious or imaginary; as, a description of real life.
Whereat I waked, and foundBefore mine eyes all real, as the dreamHad lively shadowed.
Real
True; genuine; not artificial, counterfeit, or factitious; often opposed to ostensible; as, the real reason; real Madeira wine; real ginger.
Whose perfection far excelledHers in all real dignity.
Real
Relating to things, not to persons.
Many are perfect in men's humors that are not greatly capable of the real part of business.
Real
Having an assignable arithmetical or numerical value or meaning; not imaginary.
Real
Pertaining to things fixed, permanent, or immovable, as to lands and tenements; as, real property, in distinction from personal or movable property.
For he that but conceives a crime in thought,Contracts the danger of an actual fault.
Our simple ideas are all real; all agree to the reality of things.
Real
Any rational or irrational number
Real
An old small silver Spanish coin
Real
Being or occurring in fact or actuality; having verified existence; not illusory;
Real objects
Real people; not ghosts
A film based on real life
A real illness
Real humility
Life is real! Life is earnest!
Real
No less than what is stated; worthy of the name;
The real reason
Real war
A real friend
A real woman
Meat and potatoes--I call that a real meal
It's time he had a real job
It's no penny-ante job--he's making real money
Real
Being or reflecting the essential or genuine character of something;
Her actual motive
A literal solitude like a desert
A genuine dilemma
Real
Not synthetic or spurious; of real or natural origin;
Real mink
True gold
Real
Not to be taken lightly;
Statistics demonstrate that poverty and unemployment are very real problems
To the man sleeping regularly in doorways homelessness is real
Real
Possible to be treated as fact;
Tangible evidence
His brief time as Prime Minister brought few real benefits to the poor
Real
Being value measured in terms of purchasing power;
Real prices
Real income
Real wages
Real
Having substance or capable of being treated as fact; not imaginary;
The substantial world
A mere dream, neither substantial nor practical
Most ponderous and substantial things
Real
(of property) fixed or immovable;
Real property consists of land and buildings; real estate
Real
Coinciding with reality;
Perceptual error...has a surprising resemblance to veridical perception
Real
Founded on practical matters;
A recent graduate experiencing the real world for the first time
Real
Used as intensifiers; `real' is sometimes used informally for `really'; `rattling' is informal;
She was very gifted
He played very well
A really enjoyable evening
I'm real sorry about it
A rattling good yarn
Real
Adjusted for inflation to reflect true purchasing power.
The real GDP growth was only 2% after accounting for inflation.
Real
More accurate measure of economic conditions.
The real cost of living has risen significantly.
Real
Expressed in base-year dollars.
Real estate prices, when adjusted for inflation, show a smaller increase.
Common Curiosities
What does real mean in economic terms?
Real means values adjusted for inflation to reflect true purchasing power.
Why are nominal values misleading over time?
Nominal values do not account for changes in the value of money due to inflation.
Why are real values important?
Real values provide a more accurate comparison over time by considering inflation.
What does nominal mean?
Nominal refers to values measured in current prices without adjusting for inflation.
What is real wage?
Real wage is the wage adjusted for inflation, indicating purchasing power.
How are real values calculated?
Real values are calculated by adjusting nominal values for inflation.
Why use real values for economic analysis?
Real values provide a clearer picture of economic performance by accounting for inflation.
Is nominal GDP the same as real GDP?
No, nominal GDP is measured in current prices, while real GDP is adjusted for inflation.
What does a nominal wage mean?
Nominal wage refers to the wage measured in current dollars without inflation adjustment.
What is nominal interest rate?
Nominal interest rate is the rate stated without adjusting for inflation.
Can nominal values show actual growth?
Nominal values can show growth, but it may be inflated by rising prices.
Are nominal values easier to calculate?
Yes, nominal values are straightforward and based on current prices.
Which is more useful for long-term comparisons, nominal or real values?
Real values are more useful for long-term comparisons as they adjust for inflation.
How does inflation affect nominal and real values?
Inflation increases nominal values, while real values adjust to show true value.
What is real interest rate?
Real interest rate is the nominal rate minus the inflation rate.
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Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
Co-written by
Urooj ArifUrooj is a skilled content writer at Ask Difference, known for her exceptional ability to simplify complex topics into engaging and informative content. With a passion for research and a flair for clear, concise writing, she consistently delivers articles that resonate with our diverse audience.
