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REAL VERSUS NOMINAL PRICES
• Nominal price is a complete or current dollar price of a good or service when it is sold.
• Real price is the price related to a combined measure of prices or stable dollar price.
• The Consumer Price Index (CPI) is a cumulative measure. Real prices are emphasized to allow the evaluation of relative prices.
• Calculating Real Prices
Calculating the Real Price of Milk
Calculating Real Prices: An Example - Eggs & College
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