If real salaries decrease but nominal salaries do not, this means that:
A) prices have fallen.
B) the purchasing power of money has increased.
C) prices have not changed.
D) prices have risen.

Question

Quizplus · Accepted Answer

When real salaries decrease but nominal salaries do not, it means that there has been inflation. Inflation causes the prices of goods and services to rise, which reduces the purchasing power of money. Therefore, prices have risen, leading to a decrease in the real value of salaries.

If Real Salaries Decrease but Nominal Salaries Do Not, This