In 2014, Ortega's nominal income rose by 8 percent and the price level rose by 5 percent.We can conclude that Ortega's real income:

Question

Quizplus · Accepted Answer

To calculate Ortega's real income, we need to adjust his nominal income for inflation. We can use the following formula:

Real income = Nominal income / Price level

Using the information given in the question, we can plug in the numbers:

Real income = (8% increase in nominal income) / (5% increase in price level)

Real income = (1.08) / (1.05) = 1.0285

This means that Ortega's real income increased by 2.85%. Rounded to the nearest whole number, this is 3%. Therefore, the correct answer is C) rose by 3 percent.

In 2014, Ortega's Nominal Income Rose by 8 Percent and the Price