Nominal income is equal to real income if the CPI is less than 100.

Question

Quizplus · Accepted Answer

Nominal income is not equal to real income if the CPI is less than 100. Real income takes into account inflation and adjusts for changes in purchasing power, whereas nominal income is just the raw dollar amount earned without considering the effects of inflation. If the CPI is less than 100 (which is rare), it means that the price level is lower than the base year used to calculate the CPI, but real income can still be different from nominal income due to changes in purchasing power.

Nominal Income Is Equal to Real Income If the CPI