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Differentiate between real and nominal variables.
In economics, the distinction among nominal and real numbers is often made. Nominal variables -- like nominal wages, interest rates and gross domestic product (GDP) -- refer to amounts that are paid or earned in money terms. Real variables -- real wages, interest rates, and GDP -- are corrected for the effects of inflation. They show the value of these numbers in terms of the purchasing power of wages, interest, or total production.
M.Phil. Admission Test, 2017 Economics Model Question Group A Domain Knowledge in Economics Correct answer is as marked in black. Micro Economics 1. Consider a utility function U =
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