Suppose a consumer's nominal income is $50,000 and the cost-of-living index is 1.3.The consumer's real income is:
A) $50,000.
B) $65,000.
C) $57,500.
D) $38,462

Question

Quizplus · Accepted Answer

Real income is calculated by dividing the nominal income by the cost-of-living index (also known as the price level). Therefore, $50,000 / 1.3 = $38,461.54, which rounds to $38,462.

Suppose a Consumer's Nominal Income Is $50,000 and the Cost-Of-Living