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1. Which of the following statements is true?
Nominal amounts do not include inflation
Nominal basis reflects actual amounts paid and received
Real amounts relate to actual values, whereas nominal amounts relate to forecast values
2. After four years of inflation at 2.5%, what is the value of the inflation factor used to calculate nominal and real values?
1.10, that is, prices are 10% higher than the base year
1.00, that is, prices are the same price as the base year
1.1038, that is, prices are 10.38% higher than the base year
3. Is it better to build in Real terms or Nominal terms?
Neither is better
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