Posted by Anonymous on Monday, July 27, 2009 at 7:51pm.
If a person's nominal income increases by 8% while the price level increases by 10%, the person's real income:-
a) increases by 2%, b) increases by 18%, c) decreases by 18%, d) decreases by 2%.
econ - bobpursley, Monday, July 27, 2009 at 7:53pm
I will be happy to critique your thinking.
econ - Anonymous, Monday, July 27, 2009 at 7:58pm
increases by 2%
econ - Ms. Sue, Monday, July 27, 2009 at 8:00pm
Think about it again. If the person's income increases less than the price level, how can the person's real income INCREASE??
econ - bobpursley, Monday, July 27, 2009 at 8:01pm
Didn't prices rise more than income?
econ - Anonymous, Monday, July 27, 2009 at 8:14pm
i'm not understanding this one, so for the real income am I suppose to add the nominal and price level so that it increases to 18 or what? please help I am not understanding
econ - Ms. Sue, Monday, July 27, 2009 at 8:24pm
When prices rise more than income, then your real income decreases.
econ - Anonymous, Monday, July 27, 2009 at 8:37pm
so does that mean it decreases by 2%
econ - Ms. Sue, Monday, July 27, 2009 at 8:40pm
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