Real variables

Definition

Real variables are economic measures that have been adjusted for inflation, providing a more accurate representation of changes in quantities or values over time. They reflect changes in purchasing power rather than just nominal values.

Related terms

Nominal Variables: Nominal variables are economic measures that have not been adjusted for inflation. They represent values at current prices without considering changes in purchasing power.

Real GDP: Real Gross Domestic Product (GDP) is an economic measure that accounts for inflation and reflects the value of goods and services produced within a country's borders, adjusted to constant prices.

Purchasing Power: Purchasing power refers to the amount of goods and services that can be purchased with a given amount of money. It takes into account both price levels and income levels when determining how much one can buy.