For a person to keep his real income steady at a certain level from one year to the next, his nominal income must
A) rise if the price index falls.
B) stay the same as the price index rises.
C) fall if the price index rises.
D) rise as fast as the price index.

Question

Quizplus · Accepted Answer

To maintain the same real income level, a person's nominal income must increase at the same rate as the price index (inflation rate). This ensures that the purchasing power of their income remains constant despite the increase in prices.

For a Person to Keep His Real Income Steady at a Certain