Robert received a $100 gift certificate to a bookstore a year ago. The economy has been in an inflationary period for the last year. This gift certificate is
A) expressed in real terms and is worth more.
B) expressed in nominal terms and is worth less.
C) not expressed in either real or nominal terms since it is not money.
D) adjusted in terms of the CPI.

Question

Quizplus · Accepted Answer

The gift certificate is expressed in nominal terms, meaning its value is fixed at $100. However, due to inflation, the actual purchasing power of the gift certificate has decreased over time, making it worth less in real terms.

Robert Received a $100 Gift Certificate to a Bookstore a Year