Real vs Nominal Returns, Part II: CNBC Explains

6:01 AM ET Fri, 23 Sept 2011

The general rule in economics is that the value of money will not be equal today to what it is in the future. Also known as the time value of money, this is a central concept in finance theory, which takes into account factors such as interest rates and inflation. How can you tell the difference between real and nominal returns and what critical factors do you need to understand? Salman Khan of the Khan Academy explains.