An assistant manager at a restaurant gets a $100 a month raise.He figures that with his new monthly salary he cannot buy as many goods and services as he could buy last year.
A)His real and nominal salary have risen.
B)His real and nominal salary have fallen.
C)His real salary has risen and his nominal salary has fallen.
D)His real salary has fallen and his nominal salary has risen.

Question

Quizplus · Accepted Answer

His nominal salary has increased by $100, but if he cannot buy as many goods and services as before, it means inflation has reduced his purchasing power, causing his real salary to fall.

An Assistant Manager at a Restaurant Gets a $100 a Month