# Real size

In economics, the term real size denotes an adjusted nominal value (nominal size). There are different definitions in the areas of economics and finance .

## Economics

In economics, a real variable denotes a variable that has been adjusted for price developments ( inflation adjustment ). Examples of real sizes are:

• real gross domestic product (GDP), a value of (nominal) GDP adjusted for inflationary effects. In contrast to the nominal GDP, which is calculated in the prices of the respective survey period (at market prices), the real GDP is calculated with the help of price indices based on the prices of a fixed base year. The aim is to determine the change in the services actually provided and to filter out changes that result from price fluctuations. This is necessary to ensure the comparability of the figures over several years.
• the real interest rate , ie the nominal interest rate adjusted for inflation (nominal interest rate). In other words, it corresponds to “the nominal interest rate minus the inflation rate”.
• the real wage , ie wages in relation to the general price level . The real wage , i.e. the purchasing power of the work done, is viewed in connection with the price development, which should make the actual wage development more transparent.
• real unit labor costs
• the bogus profit .

In the media, changes in GDP are usually given in real terms, whereas in wages it is the nominal change.

## financing

In the finance theory, the real size, similar to the economics, denotes an adjusted value. This is of particular interest in the case of contractual obligations. For example, the rate of return on bonds is given as the rate of return on the face value (usually 100 monetary units); This means that the annual interest payment does not depend on the actual issue price or purchase price, but on the nominal value documented in the document (this is also referred to as the nominal interest rate). However, the issue price or purchase price can sometimes differ significantly from the nominal value (extreme case zero coupon or zero bond, without interest), which affects the actual or real interest over the term. One also speaks of the effective interest rate or the return . In the opposite case, when taking out a loan , the agreement of a discount (also Damnum) affects the real interest rate.

## Individual evidence

1. ^ Nicholas Gregory Mankiw: Fundamentals of Economics. 3rd, revised edition. 2004.

## literature

• Nicholas Gregory Mankiw : Fundamentals of Economics . 3rd, revised edition. Schäffer-Poeschel, Stuttgart 2004, ISBN 3-7910-2163-X , p. 868 (English: Principles of Economics . Translated by Adolf Wagner and Marco Herrmann).