If your nominal income in 2014 is $50,000,and prices increase by 50% between 2014 and 2017,then to have the same real income,your nominal income in 2017 must be

Question

Quizplus · Accepted Answer

If prices increase by 50%, then the cost of goods and services will also increase by 50%. To maintain the same purchasing power, your nominal income must also increase by 50%.

The nominal income in 2017 would be:

$50,000 * (1 + 0.5) = $75,000

Therefore, the correct answer is B) $75,000.

If Your Nominal Income in 2014 Is $50,000,and Prices Increase