If nominal national income increased by 10% over a certain period of time while real national income increased by 20%,then
A)everybody in the economy became worse off.
B)inflation has occurred during this time period.
C)the labour force increased by 10%.
D)the price level has declined by about 10%.
E)the price level has increased by approximately 10%.

Question

Quizplus · Accepted Answer

The price level has declined because real national income, which is adjusted for inflation, increased by a greater percentage (20%) than nominal national income (10%). This indicates that the amount of goods and services produced has increased more than the prices, leading to a decrease in the price level.

If Nominal National Income Increased by 10% Over a Certain