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Real vs. Nominal

"What is the real price (for example of oil)? What is the difference between the real and nominal price? Do real prices change over time?" - Phillip

A nominal price is measured in terms of units of money- for example, oil is currently $88USD per barrel. A real price is adjusted for changes in the value of a unit of money- for example, if prices had risen by 20% since 2000, we'd say that the real price of a barrel of oil is (88 x 0.8) USD per barrel in year 2000 USD. Real prices changes over time, but generally by smaller magnitudes than nominal prices.

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