The real value of money or an economic variable refers to its value adjusted for inflation, which measures its true purchasing power—the quantity of goods and services it can acquire at a particular point in time.

• Real value facilitates accurate comparisons over different periods by eliminating distortions arising from fluctuations in the general price level.
• Example: Real GDP is calculated by adjusting nominal GDP for the effects of inflation or price changes (roughly, nominal GDP deflated by the inflation rate).