The formula to calculate the Real Price is:
\[ \text{RP} = \frac{\text{NP}}{\text{PI}} \times 100 \]
Where:
Real Price is the adjusted value of a nominal price, taking into account changes in the price index. It reflects the true purchasing power of money by accounting for inflation or deflation.
Let's consider an example:
Using the formula to calculate the Real Price:
\[ \text{RP} = \frac{200}{120} \times 100 \approx 166.67 \text{ dollars} \]
This means that the real price for this scenario is approximately $166.67.
