Difference Between Nominal and Real Values

Main Difference – Nominal vs Real Values

In economics, the value of a given commodity will be measured in two frameworks as nominal value and real value. If a given commodity is expressed in a fixed currency value, it is identified as the nominal value. If the market price changes are added to the nominal value of a particular good or a service, it is known as the real value of that commodity.  Thus, the main difference between nominal and real values is the changes in the market price level. These nominal and real value concepts play a vital role in economics as these two concepts similarly represent in interest rates in the forms of nominal interest rate and real interest rate / GDP etc.

This article looks at,

1. What are Nominal Values – Definition, Influencing Factors, Uses

2. What are Real Values  – Definition, Influencing Factors, Uses

3. What is the difference between Nominal and Real ValuesDifference Between Nominal and Real Values - Comparison Summary

What is a Nominal Value

If the economic value of a particular commodity is expressed in terms of a currency value, it is known as the nominal value of that commodity. This is merely a statistical representation; inflation or market price changes are not incorporated in this value. The nominal value provides just an estimation of the price of a particular commodity or bundle of commodities. Thus, it is difficult to make important economic decisions by just looking at these tentative values.

Difference Between Nominal and Real Values

What is a Real Value

If the market price changes are added to the nominal value of a particular good or a service, it is known as the real value of that commodity. Therefore, calculating real value involves adjusting the nominal value according to inflation. Hence, the impact of price movements on the market is removed from the nominal values deflating them with pre-determined economic indices. Therefore, this real value is identified as the most accurate value for the economic decision making.

Similarities Between Nominal and Real Values

  • Both are used to measure the value of commodity prices and can be used to make economic decisions. However, real values are treated as more accurate since it takes market price changes into consideration.
  • Both nominal, real concepts are used in different economic grounds such as GDP, output, income, and interest rates.

Difference Between Nominal and Real Values


Nominal value is defined as the money value of a commodity.

Real value is defined as the nominal value adjusted for inflation.

Opportunity Cost vs Monetary Value

Nominal value takes monetary value into consideration. 

Real value takes opportunity cost into consideration. 


Nominal value presents the current money value.

Real value presents a more accurate picture since it includes market price changes (inflation / deflation).

Nominal vs Real Values – Conclusion

Nominal and real values are two different concepts in Economics. The underlying difference between the two concepts is the changes in market price levels (inflation, deflation). Nominal values (price of goods and services, income, interest rate, income, etc.) are calculated based on the current market values, without taking inflation into consideration. In contrast, real values are adjusted for inflation and are calculated using price indices. Hence, real values always produce a straightforward view of what is really going on in the marketplace behind the price veils.

About the Author: G.Perera

Related pages

examples of saturated and unsaturated hydrocarbonsherbivores carnivoresalpha helices and beta pleated sheets are examples ofmicroscope lens diagramautosomes are chromosomespictures of barley and wheatdefine polymer and monomersn1 and sn2 reactionswhat is the difference between geeks and nerdscalculate pv of bondcomparison of monocot and dicotdistinguish between parenchyma collenchyma and sclerenchyma cellsomni antenna vs directional antennadifference between alaskan and siberian huskytheory of marxism in literaturedifference between isotonic hypertonic and hypotonicbackcross definitionexamples of macro mineralslilac definitionhypo hyperglycemia symptomsdefinition of rotational motion in physicsamorphous solids examplesidentifying adjectives in a sentencedifference between stupid and foolishsmoothie vs milkshakesmooching and kissingwhat is a alliteration in a poemdifference between aquatic and terrestrial ecosystemsthree little pigs lessonguar or xanthan gumadenoma vs carcinomaaardvark vs ant eaterwhat is the difference between benzyl and phenylwhat is the difference between average speed and average velocitydifference between a refracting telescope and a reflecting telescopebilateral symmetrical animalscognitive assimilationthe meaning of amicabletime difference between pst and utcalkane solubility in waterdifference between inelastic and elastickinematics physics definitionrubella vs rubeoladifference between endnotes and bibliographywhat is the difference between regular and irregular verbspolyunsaturated fats definitionwhat does monologue mean in literatureequity vs equalitycentrifugal force vs centripetal forcedifference between truvia and steviaprotagonist and antagonist meaningallegory symbolismhoney badger furwhat is the difference between a concave and convex lensdefine condecenddifference between homeopathy and ayurvedaalaskan malamute huskiesoratorio music definitionprotagonist antagonistcelpip test centersdiamante poem antonymwhat is the difference between cartoons and animewhat is bmr and rmrdifference between revolution and revoltwhat is an essential appositivedifference between sushi and sashimitypes of fixed resistorsdifference between elocution and declamationstring theory vs loop quantum gravitywilhelm wundt theory of structuralismwhat is the difference between a pond and a lakean example of a nonpolar molecule isdifference between tachycardia and fibrillationchemical structure of polysaccharides