Which of the following statements is correct?
A)Real and nominal incomes always move in the same direction.
B)Inflation increases the purchasing power of the dollar and necessarily reduces one's nominal income.
C)Inflation reduces the purchasing power of the dollar and necessarily reduces one's real income.
D)Inflation reduces the purchasing power of the dollar, but does not necessarily reduce one's real income.
E)Inflation increases the purchasing power of the dollar, but does not necessarily reduce one's real income

Question

Quizplus · Accepted Answer

Inflation reduces the purchasing power of the dollar, but if nominal income increases at the same rate or faster than inflation, real income may not decrease.

Which of the Following Statements Is Correct