Q.Distinguish between nominal wage and real wage.

A worker's pay slip and a worker's actual standard of living are not the same thing, and this is exactly the distinction between nominal and real wages.

Nominal (money) wage is the actual number of rupees paid to a worker for their labour, without any adjustment for the cost of living. Real wage measures the purchasing power behind that money figure -- what it can actually buy in terms of goods and services -- once the general price level is taken into account.

The distinction matters because the two can move in opposite directions. If a worker's money wage rises by 8% in a year while prices rise by 12% in the same year, the nominal wage has gone up, but the real wage -- what the worker can actually purchase -- has fallen. Judging whether a worker's genuine standard of living has improved therefore always requires looking at the real wage, never the money wage in isolation.

A common slip is assuming that a rise in the money wage always means workers are better off -- this ignores what has happened to prices over the same period, which is precisely what the real-wage concept corrects for.