If your rent increases from $1,000 to $1,100 over a period of one year and your income rises from $6,000 to $7,000,your nominal income has
A)Increased,but your real income has decreased.
B)Increased,and your real income has increased.
C)Decreased,and your real income has decreased.
D)Increased, but your real income has remained the same.

Question

Quizplus · Accepted Answer

Even though the rent has increased, the increase in nominal income ($1,000) is greater than the increase in rent ($100), indicating an increase in purchasing power, and thus, an increase in real income.

If Your Rent Increases from $1,000 to $1,100 Over a Period