For a given amount of nominal income, the real income will
A) fall if the price level rises.
B) fall if the price level falls.
C) be unaffected if the price level falls.
D) rise as the price level rises.

Question

Quizplus · Accepted Answer

Real income is the amount of goods and services that can be purchased with a given nominal income. If the price level rises, the purchasing power of the nominal income decreases and hence the real income will fall.

For a Given Amount of Nominal Income, the Real Income