If your nominal income in 2002 was $50,000,and prices doubled between 2002 and 2011,to have the same real income,your nominal income in 2011 must be

Question

Quizplus · Accepted Answer

If prices doubled, it means that the inflation rate is 100%, which means that the purchasing power of one dollar in 2011 is the same as two dollars in 2002. To have the same real income, you will need to double your nominal income in 2002. Therefore, your nominal income in 2011 should be $100,000.

If Your Nominal Income in 2002 Was $50,000,and Prices Doubled