Final answer:
Real value is an economic statistic adjusted for inflation, allowing for accurate cross-time comparisons by removing price level distortions. Option b) 'It refers to the nominal value adjusted for inflation' accurately describes real value.
Step-by-step explanation:
The term real value refers to the value of an economic statistic after it has been adjusted for inflation. This adjustment is important because it allows for a more accurate comparison of economic data over time, showing true growth or decline without the distortion caused by changes in the price level.
When an economist mentions real value they have selected a base year and used a price index such as the GDP deflator to recalibrate the nominal values to account for inflation, effectively measuring them in the money that was prevalent during the chosen base year. Therefore the correct answer to which of the following statements best describes real value is:
b) It refers to the nominal value adjusted for inflation.