If your gasoline purchases decrease from $150 per month to $80 over a period of one year due to lower prices and your income decreases from $1,600 per month to $1,500 per month,your nominal income has
A)Increased,but your real income has decreased.
B)Decreased,but your real income has increased.
C)Increased,and your real income has increased.
D)Increased,but your real income has remained the same.

Question

Quizplus · Accepted Answer

Nominal income refers to the amount of money you earn, while real income refers to your purchasing power. In this case, your nominal income has decreased, but your gasoline purchases have also decreased, leaving you with more money to spend on other goods and services. Therefore, your real income has actually increased even though your nominal income has decreased.

If Your Gasoline Purchases Decrease from $150 Per Month to $80