What is the difference between “nominal” and “real” values in economics?

Nominal values refer to the raw, unadjusted values of economic variables such as income, GDP, or wages, without taking into account inflation or changes in the price level over time. Real values, however, are adjusted for inflation, providing a more accurate picture of an economic variable’s purchasing power or true value. For example, real GDP measures the value of goods and services produced by an economy adjusted for inflation, while nominal GDP uses current prices, which can overstate economic growth if inflation is high. Real values allow for more accurate comparisons over time, as they account for changes in the price level.