When shopping you notice that a pair of jeans costs $20 and that a tee-shirt costs $10. you compute the price of jeans relative to tee-shirts. the dollar price of jeans and the relative price of jeans are both nominal variables. the dollar price of jeans and the relative price of jeans are both real variables. the dollar price of jeans is a nominal variable; the relative price of jeans is a real variable. the dollar price of jeans is a real variable; the relative price of jeans is a nominal variable?

Question

Andy Mays

Business

21 July, 19:55

When shopping you notice that a pair of jeans costs $20 and that a tee-shirt costs $10. you compute the price of jeans relative to tee-shirts. the dollar price of jeans and the relative price of jeans are both nominal variables. the dollar price of jeans and the relative price of jeans are both real variables. the dollar price of jeans is a nominal variable; the relative price of jeans is a real variable. the dollar price of jeans is a real variable; the relative price of jeans is a nominal variable?

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Josephine Strong · Answer 1

So, the dollar price of the jeans is the nominal variable, and the relative price is the real variable. The relative price of the jeans have been adjusted to inflation. The dollar price hasn't been adjusted for inflation, hence why it is the nominal variable (not adjusted for inflation).