Question

Actual dollars, sometimes called current or nominal dollars are expressed ________.

a. as a ratio of future dollars normalized to the consumer price index.
b. at the time the cash flow occurs.
c. as the numerical value of the consumer price index.
d. in terms of constant purchasing power.
e. None of the above

Answer 1

Actual or nominal dollars are expressed at the time the cash flow occurs, reflecting market prices at that time without adjusting for inflation.

Step-by-step explanation:

Actual dollars, sometimes called current or nominal dollars, are expressed at the time the cash flow occurs. This means that nominal values are not adjusted for inflation and represent the actual amount of currency used at the time of a transaction. Unlike real dollars, which are adjusted for inflation to reflect constant purchasing power, nominal dollars reflect the market prices that exist when a transaction is made. It's key to distinguish between nominal and real values in economic statistics because without considering inflation, the analysis might be inaccurate.