Nominal variables are measured in monetary units. Any price or wage denominated in money, such as Hailey's $28.00 per hour wage, is an example of a nominal variable. Real variables are measured in physical units. Any price or wage stated in terms of goods is a real variable. For example, in 2012, the relative price of a latte is 0.57 puzzle books.

Hailey's wage and the prices of puzzle books and lattes double as the Fed increases the money supply between 2012 and 2017. Since all prices have doubled, the relative price of a puzzle book remains $14.00$8.00=1.75 lattes$\frac{\mathrm{\$14.00}}{\mathrm{\$8.00}}=1.75\mathit{ }\mathrm{lattes}$. The money-denominated, or nominal, value of Hailey's wage increases over this period. Hailey's real wage, however, does not change. Her relative wage is still $56.00$14.00=4 puzzle books per hour$\frac{\mathrm{\$56.00}}{\mathrm{\$14.00}}=4\mathit{ }\mathrm{puzzle books}\mathrm{ per hour}$ or $56.00$8.00=7 lattes per hour$\frac{\mathrm{\$56.00}}{\mathrm{\$8.00}}=7\mathit{ }\mathrm{lattes}\mathrm{ per hour}$ after the increase in the money supply. Hailey's experience is consistent with monetary neutrality, which is the proposition that a change in the money supply affects nominal variables but does not affect real variables.