If the number of dollars you receive every year is the same,but prices are rising,then your nominal income:
A) Rises but your real income falls.
B) Rises and your real income rises.
C) Stays the same but your real income falls.
D) Stays the same but your real income rises.

Question

Quizplus · Accepted Answer

C) Stays the same but your real income falls. This is because nominal income refers to the amount of money you are paid, which does not change in this scenario. However, real income adjusts for inflation and represents purchasing power. If prices are rising (inflation), but your nominal income remains constant, your real income (purchasing power) decreases.

If the Number of Dollars You Receive Every Year Is