Nominal And Real Values

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| By KarolinaKaz
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KarolinaKaz
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Quizzes Created: 1 | Total Attempts: 131
| Attempts: 131
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  • 1/10 Questions

    Inflation can affect the real/nominal price

    • True
    • False
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About This Quiz

This quiz on 'Nominal and Real Values' explores key economic concepts, distinguishing between nominal and real values of goods, effects of inflation, and calculations involving real wages. It assesses understanding of how money's value changes over time and its impact on purchasing power.

Nominal And Real Values - Quiz

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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. 

    Real prices can _________ even if nominal prices increase

    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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  • 4. 

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

    • Street

    • Relative

    • Cash

    • Raw

    Correct Answer
    A. 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. 

    The "real" value of a good is basically 

    • Mexico

    • Trading and bartering

    • $666

    • The moon landing was faked

    Correct Answer
    A. 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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  • 6. 

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

    Correct Answer
    nominal
    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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  • 7. 

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

    • True

    • False

    Correct Answer
    A. 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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  • 8. 

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

    • 1%

    • 2%

    • 5%

    • 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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  • 9. 

    The nominal price of 5 bananas is

    • $600

    • 5 oranges

    • Around $3

    • A banana peel

    Correct Answer
    A. 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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  • 10. 

    The real price of a water bottle is

    • $0.25

    • A cactus

    • $2

    • A granola bar

    Correct Answer
    A. 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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  • Current Version
  • Feb 15, 2024
    Quiz Edited by
    ProProfs Editorial Team
  • Apr 29, 2015
    Quiz Created by
    KarolinaKaz
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