If real income increases by 4 percent and the price level increases by 3 percent, nominal income must:

Name: If real income increases by 4 percent and the price level increases by 3 percent, nominal income must:
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Real income accounts for inflation, so if real income increases by 4% amidst a 3% increase in the price level, nominal income (which does not adjust for inflation) must increase by the sum of these percentages, resulting in a 7% increase.

If Real Income Increases by 4 Percent and the Price