To approximate the percentage change in real income over any period of time,
A) we need to subtract the percentage change in nominal income from the inflation rate
B) we need to subtract the rate of inflation from the percentage change in nominal income
C) we need to divide the percentage change in nominal income by the inflation rate
D) we need to multiply the change in income by the inflation rate
E) we need to multiply the nominal percentage change in income by the percentage change in inflation rate

Question

Quizplus · Accepted Answer

To calculate the percentage change in real income, we need to adjust for inflation. This means we need to subtract the rate of inflation from the percentage change in nominal income. Therefore, choice B is the correct answer.

To Approximate the Percentage Change in Real Income Over Any