The Wealth of Nations Chapter 5 Book 1 - Understanding Real VS Nominal Prices

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In this video, we explore the concept of real vs. nominal prices, diving into how labor is the true measure of a commodity’s value. While most commodities are priced in money, labor remains a stable and universal standard, as money can fluctuate with changes in supply or coinage standards. We’ll break down how the real price of an item is determined by the labor required to acquire it, and how its nominal price reflects its value in money, which often varies across different regions and periods. The video also touches on the history of currency and how the value of metals like gold and silver has shaped global trade. By understanding these fundamental concepts, you’ll gain deeper insight into how pricing mechanisms work and why labor remains the cornerstone of value across economies.
00:00 - Introduction real vs nominal prices
00:15 - Explanation of Real and Nominal Prices
00:55 -Historical Context and Examples
02:06 - Modern Implications and Merchant Practices
04:25 - Conclusion