[This is part of the series: The Complete Guide To Economics 101.]
In economics, what is the difference between a nominal and real deficit?
The Difference Between A Nominal and Real Deficit is that a nominal deficit simply looks at how much money is owed after all government inflows, and outflows are accounted for.
The real deficit is an inflation-adjusted look at the nominal deficit.
How do inflation and deficits relate?
Inflation destroys debt.
Do you see a possible conflict here?
In any economy the government is usually the largest debtor – at the same time – the government also controls the money supply, and therefore, inflation.