If your nominal income in 2014 was $50,000,and prices doubled between 2014 and 2017,to have the same real income,your nominal income in 2017 must be

Question

Quizplus · Accepted Answer

Nominal income is not adjusted for inflation, while real income is adjusted for inflation. In this case, prices have doubled between 2014 and 2017, which means that the same goods and services cost twice as much in 2017 as they did in 2014. Therefore, to maintain the same purchasing power, the nominal income in 2017 must be twice the nominal income in 2014. So, $50,000 x 2 = $100,000.

If Your Nominal Income in 2014 Was $50,000,and Prices Doubled