I got this question in my mock exam and i need help?

Question

'to keep public expenditure below 2% a year in moinal terms rather than real terms' what does this mean?

WHAT I WROTE:

I wrote that nominal refers to a change in prices excluding inflation and growth in real terms includes inflation. Therefore to keep public expenditure growth below 2% a year in nominal terms, means to halt government expenditure below 2% a year regardless of change in inflation.

HELP

Answer 1

Normal terms are real terms -- for example a $5 bill is a money in normal terms but in real terms it still the same $5 bill.  

Don't have any other explaination...

Answer 2

It dont matter now. You've done your exam

Answer 3

Your good. If government spending increased 2% per year, then its a nominal figure. A "real" change would be 2% plus inflation. So if the government merely increased spending at the same rate of inlfation, we'd have 0% real growth.

(nominal rate minus inflation equals real rate)

Good answer, don't worry.

Answer 4

I don't know what moinal means. :(