constant dollar: meaning, definition, pronunciation and examples
C1Formal, Technical, Academic, Business/Finance
Quick answer
What does “constant dollar” mean?
A unit of measurement for the value of money from a specified base year, used to adjust for inflation by removing the effect of price changes over time.
Audio
Pronunciation
Definition
Meaning and Definition
A unit of measurement for the value of money from a specified base year, used to adjust for inflation by removing the effect of price changes over time.
A financial or economic concept representing the purchasing power of money, standardised to a reference period, allowing for comparison of real values across different years.
Dialectal Variation
British vs American Usage
Differences
Concept and term are identical in both varieties. Spelling follows respective conventions for other words in a phrase (e.g., 'realise' vs. 'realize').
Connotations
Neutral, technical term with no regional connotative differences.
Frequency
Equally common in UK and US economic/financial discourse.
Grammar
How to Use “constant dollar” in a Sentence
[figure/amount/value] + in + constant dollarsadjusted + to + constant dollarsexpressed + in + constant dollar termscalculate + [noun phrase] + in constant dollarsVocabulary
Collocations
Examples
Examples of “constant dollar” in a Sentence
adjective
British English
- The constant-dollar analysis revealed a decline in real spending.
- They published the constant-dollar estimates in the annex.
American English
- The constant-dollar analysis revealed a decline in real spending.
- They published the constant-dollar estimates in the appendix.
Usage
Meaning in Context
Business
Used in financial reports, earnings statements, and long-term budget projections to show real growth, e.g., 'Our revenues grew 3% in constant dollars.'
Academic
Used in economic research papers and textbooks when analysing time-series data, e.g., 'The study examines investment trends in constant 2015 dollars.'
Everyday
Virtually never used in everyday conversation outside of discussions about economics or news reports on national budgets.
Technical
Core term in national accounting (e.g., calculating real GDP), corporate finance, and public policy analysis for removing inflationary distortion.
Vocabulary
Synonyms of “constant dollar”
Strong
Neutral
Weak
Vocabulary
Antonyms of “constant dollar”
Watch out
Common Mistakes When Using “constant dollar”
- Using 'constant dollar' to refer to a stable exchange rate (incorrect).
- Saying 'constant dollars' when you mean 'current dollars' (a key antonym error).
- Omitting the base year (e.g., 'constant 2020 dollars'), which is essential for clarity.
FAQ
Frequently Asked Questions
No. It is a theoretical, statistical unit of account used only for analysis and comparison. You cannot have a constant dollar bill in your wallet.
'Current dollars' (or 'nominal dollars') represent the actual price or value at the time of transaction, including inflation. 'Constant dollars' adjust past or future amounts to the purchasing power of a single base year, showing the 'real' value.
The base year provides the anchor for the price level. Saying 'in constant dollars' is meaningless without it, as you need to know which year's purchasing power is being used as the constant standard.
It's uncommon in everyday personal budgeting. However, the concept is useful for understanding, for example, whether your salary increase is higher than inflation (a 'real' raise in constant-dollar terms).
A unit of measurement for the value of money from a specified base year, used to adjust for inflation by removing the effect of price changes over time.
Constant dollar is usually formal, technical, academic, business/finance in register.
Constant dollar: in British English it is pronounced /ˈkɒnstənt ˈdɒlə/, and in American English it is pronounced /ˈkɑːnstənt ˈdɑːlər/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “(none - this is a technical term)”
Learning
Memory Aids
Mnemonic
Think of a ruler (constant) measuring purchasing power. The 'constant dollar' is like a ruler that never shrinks or stretches with inflation, so you can always measure the true size of the economy.
Conceptual Metaphor
A STANDARDISED MEASURING STICK for economic value; a TIME MACHINE for money, bringing past or future amounts to a common point for fair comparison.
Practice
Quiz
What is the primary purpose of using 'constant dollars' in an economic report?