The payments you make on your automobile loan are given in terms of dollars.As prices rise you notice you give up fewer goods to make your payments.
A)The dollar amount you pay is a nominal value.The number of goods you give up is a real value.
B)The dollar amount you pay is a real value.The number of goods you give up is a nominal value.
C)Both the dollar amount you pay and the goods you give up are nominal values.
D)Both the dollar amount you pay and the goods you give up are real values.

Question

Quizplus · Accepted Answer

The dollar amount you pay is a nominal value because it is not adjusted for inflation, while the number of goods you give up is a real value because it does account for inflation. As prices rise, the dollar amount stays the same but the value of the dollar decreases, so you can afford fewer goods with each payment.

The Payments You Make on Your Automobile Loan Are Given