Explain the difference between a nominal value and a real value. ...

[saraeharris]

Explain the difference between a nominal value and a real value.
 
  What will be an ideal response?

Question 2

The bowed out (concave) shape of the production possibilities curve implies that as production of one good
 
  A) increases, society must forgo increasing amounts of another good.
  B) increases, production of other goods increases as well.
  C) decreases, production of other goods decreases as well.
  D) increases, society must forgo decreasing amounts of another good.
  E) increases, society can obtain a free lunch.

[raili21]

Answer to Question 1

A nominal value is the actual price that is paid or the actual wage received. If today you pay 1 for a can of Pepsi, this amount is a nominal value. A real value is adjusted for changes in the price level. To compare prices or wages across years, the nominal values need to be converted to real values. In other words, you need to compare values in the same dollars. This conversion is necessary because a dollar today is not worth the same as a dollar 20 years ago.

Answer to Question 2

A

[saraeharris]

YES! Correct, THANKS for helping me on my review

[Joy Chen]

TYSM