Due to inflation,nominal prices are usually
A) equal to real prices.
B) smaller than real prices.
C) larger than real prices.
D) a constant proportion different from real prices.

Question

Quizplus · Accepted Answer

Inflation leads to a general increase in the level of prices. Nominal prices are the prices that we observe in the market, whereas real prices are adjusted for inflation. As nominal prices do not take into account the impact of inflation, they are typically larger than real prices. Therefore, the correct choice is C – nominal prices are larger than real prices.

Due to Inflation,nominal Prices Are Usually