Examlex
If the nominal wage rises from €10 per hour in period 1 to €15 per hour in period 2 as the expected price level rises from 1 to 3 while the actual price level rises from 4 to 5, then from period 1 to period 2:
Real Income
Income of individuals or nations adjusted for inflation, reflecting the actual purchasing power.
Velocity of Money
The rate at which money is exchanged from one transaction to another and used to purchase goods and services, reflecting the economy's activity level.
Nominal GDP
A measure of a country's economic output based on current prices, without adjusting for inflation.
Equation of Exchange
The equation of exchange is an economic formula relating the supply of money in an economy to the velocity of money, price level, and an index of expenditures.
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