With the exception of the real interest rate, all real variables of macroeconomics are calculated by
A)dividing a nominal variable by the price level.
B)subtracting the inflation rate from the nominal value.
C)subtracting off the most volatile components of the variable.
D)multiplying the nominal variable by the price level.
E)adding the inflation rate to the nominal value.

Question

Quizplus · Accepted Answer

Real variables are adjusted for changes in the price level or inflation. Dividing a nominal variable by the price level gives a measure of the variable in constant dollars, representing its purchasing power at a given point in time. Examples include real GDP, real wage, and real interest rate.

With the Exception of the Real Interest Rate, All Real