Nominal Dollars Versus Real Dollars (Also Known as Current Dollars Versus Constant Dollars)
Anything measured in dollars can be looked at in two ways. Nominal dollars (also referred to as current dollars) represents the actual amount of money spent or earned over a period of time. You'll see stories mentioning how American factory workers received total pay hikes of $500 million, or a 5% increase, in the last 12 months. Or perhaps you read that company A reported income from sales of sweaters climbed to $220 million that year, up from $200 million the year before, or a jump of 10%. These figures are based in nominal dollars.
However, nominal (or current) dollars gives you only part of the story. What's missing is how inflation can distort such ...
