(A)Explain the Distinction Between the Nominal Deficit and the Real

Essay

(a)Explain the distinction between the nominal deficit and the real deficit.Explain why inflation wipes out debt.
(b)Demonstrate your understanding of this relationship by calculating the real deficit from the figures in the examples given below:
#1: Nominal deficit = $8 million; Inflation = 5%; Total debt = $100 million
#2: Nominal deficit = $8 million; Inflation = 8%; Total debt = $100 million
#3: Nominal deficit = $8 million; Inflation = 8%; Total debt = $200 million