Nominal And Real Values

1.

The ______value of a good is its value in terms of money

Explanation
The term "nominal" refers to the value of a good in terms of money. It signifies the face value or the stated value of an item, without taking into account factors such as inflation or market conditions. In other words, the nominal value represents the price or worth of a good as it is stated or recorded, rather than its actual or adjusted value.

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2.

The ________ value of a good is its value in terms of other goods

Explanation
The real value of a good refers to its value in terms of actual, tangible resources such as money or physical assets. On the other hand, the relative value of a good refers to its value in comparison to other goods or services. In this context, the question is asking for the value of a good in terms of other goods, indicating that the answer is both real and relative.

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3.

Inflation can affect the real/nominal price
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
Inflation refers to the general increase in prices of goods and services over time. It affects both the real and nominal prices. The nominal price is the price at which a good or service is sold, while the real price takes into account the effect of inflation on purchasing power. As inflation increases, the nominal price of goods and services also tends to increase. This means that the real price, adjusted for inflation, may remain the same or even decrease. Therefore, it is true that inflation can affect the real/nominal price.

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4.

The "real" price may also be called the ________ price
- A.
  
  Street
- B.
  
  Relative
- C.
  
  Cash
- D.
  
  Raw
Correct Answer
B. Relative

Explanation
The "real" price refers to the price of a product or service in relation to other factors or variables. It is often used to compare prices in different contexts or adjust for inflation. Therefore, the term "relative" is an appropriate alternative to describe the "real" price, as it signifies the comparison or relationship between prices.

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5.

Due to inflation, the dollar is worth more nowadays than it was before
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Inflation refers to the general increase in prices of goods and services over time, resulting in the decrease in the purchasing power of money. Therefore, the statement "Due to inflation, the dollar is worth more nowadays than it was before" is incorrect. Inflation causes the value of a currency to decrease, not increase. Hence, the correct answer is False.

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6.

Real Wage = Nominal Wage / _____% Increase in Prices Since Base Year
- A.
  
  1%
- B.
  
  2%
- C.
  
  5%
- D.
  
  10%
Correct Answer
A. 1%

Explanation
The real wage is calculated by dividing the nominal wage by the percentage increase in prices since the base year. In this case, the correct answer is 1% because it represents the percentage increase in prices. This means that the real wage is adjusted for a 1% increase in prices since the base year.

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7.

Real prices can _________ even if nominal prices increase

Correct Answer
decrease
dicrease
go down
lower
fall

Explanation
Real prices can decrease even if nominal prices increase. This is because real prices take into account the effect of inflation on the purchasing power of money. If nominal prices increase but the rate of inflation is higher, the real prices will actually decrease. Similarly, if nominal prices remain the same but the rate of inflation decreases, the real prices will also decrease. In both cases, the real prices go down, lower, or fall.

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8.

The nominal price of 5 bananas is
- A.
  
  $600
- B.
  
  5 oranges
- C.
  
  Around $3
- D.
  
  A banana peel
Correct Answer
C. Around $3

Explanation
The given information states that the nominal price of 5 bananas is around $3. This implies that each banana costs approximately $0.60 ($3 divided by 5).

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9.

The real price of a water bottle is
- A.
  
  $0.25
- B.
  
  A cactus
- C.
  
  $2
- D.
  
  A granola bar
Correct Answer
D. A granola bar

Explanation
The given options present the prices of a water bottle, a cactus, and a granola bar. The correct answer is "a granola bar" because it is the only option that provides a specific price, which is not given for the other items. Therefore, the real price of a water bottle remains unknown based on the given information.

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10.

The "real" value of a good is basically
- A.
  
  Mexico
- B.
  
  Trading and bartering
- C.
  
  $666
- D.
  
  The moon landing was faked
Correct Answer
B. Trading and bartering

Explanation
The "real" value of a good refers to its actual worth or usefulness in terms of trading and bartering. In a trading and bartering system, goods are exchanged based on their perceived value and usefulness to individuals. This value is not determined by monetary worth, but rather by the practicality and desirability of the good in a given context. Therefore, the correct answer is trading and bartering.

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Nominal And Real Values

The ______value of a good is its value in terms of money

The ________ value of a good is its value in terms of other goods

Inflation can affect the real/nominal price

The "real" price may also be called the ________ price

Due to inflation, the dollar is worth more nowadays than it was before

Real Wage = Nominal Wage / _____% Increase in Prices Since Base Year

Real prices can _________ even if nominal prices increase

The nominal price of 5 bananas is

The real price of a water bottle is

The "real" value of a good is basically