If your nominal income rises faster than the price level,
A)Your real income has fallen.
B)Your real income has risen.
C)You can buy fewer goods and services.
D)There must be deflation.

Question

Quizplus · Accepted Answer

If nominal income rises faster than the price level, it means that your purchasing power has increased. This is because the increase in your nominal income allows you to buy more goods and services even though their prices have not risen as fast. Therefore, your real income has risen.

If Your Nominal Income Rises Faster Than the Price Level