23.3 Nominal and Real Values
MyEconLab Concept Video
In 2016, it cost 47 cents to mail a first-class letter. One hundred years earlier, in 1916, that same letter would have cost 2 cents to mail. Does it really cost you 23.5 times the amount that it cost your great-great-grandmother to mail a letter?
Which postage stamp has the higher real price: the 2¢ stamp of 1916 or today’s 47¢ stamp?
You know that it does not. You know that a dollar today buys less than what a dollar bought in 1916, so the cost of a stamp has not really increased to 23.5 times its 1916 level. But has it increased at all? Did it really cost ...
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