The real-nominal principle states that
A) people respond more to explicit, or real, costs than to implicit costs.
B) people respond more to implicit costs than to explicit costs.
C) what matters to people is the face value of money or income.
D) what matters to people is the purchasing power of money or income.

Question

Quizplus · Accepted Answer

The real-nominal principle states that what matters to people is the purchasing power of money or income, rather than just the face value. This means that people are more likely to respond to changes in the real value of their income, such as inflation or changes in prices, rather than just the nominal value.

The Real-Nominal Principle States That