What do you understand by nominal and
capital money?
Nominal money means, money at its current
value (not adjusted for inflation). When nominal money is adjusted with
inflationary factor, then it is called real money.
For example: Price of a Car is Rs 300,000
and rate of inflation is 5%. The nominal money you pay for the car is Rs
300,000.
And the real money you will spend is Rs
300,000/1.05 = Rs 285,714 (approximately).
Capital money means money utilized for
capital or long-term purpose. Capital money is
not something tangible, but
is instead anything pertaining to a promoting means of production.
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