Your spouse complains that her 6% raise this year will not keep up with the increase in prices.In other words,she is unable to buy the same basket of goods with her 6% raise.Therefore,she believes that her
A)nominal income and real income increased.
B)nominal income increased,but their real income decreased.
C)nominal income and real income decreased.
D)nominal income decreased,but their real income increased.

Question

Quizplus · Accepted Answer

The spouse's nominal income has increased by 6%, which means she has received a raise. However, since the increase in prices has outpaced the raise, her real income - the purchasing power of her income - has actually decreased. This is referred to as inflationary pressure on the economy.

Your Spouse Complains That Her 6% Raise This Year Will