If nominal national income increased by 20 percent over a certain period of time while real national income increased by 10 percent, then

Question

Quizplus · Accepted Answer

Nominal national income increased by 20%, which includes the effect of inflation. Real national income increased by only 10%, which is the increase in production after adjusting for inflation. Therefore, inflation during this time period was about 10%, which means the price level has increased by approximately 10%.

If Nominal National Income Increased by 20 Percent Over a Certain