If Your Nominal Income Remains Constant at $3,000 While the Price

question 99

Multiple Choice

If your nominal income remains constant at $3,000 while the price of an important product in your budget,such as cell phone service,rises from $50 to $100,your real income has

• A)Decreased by $50.
• B)Decreased by $100.
• C)Decreased by $150.
• D)Remained constant.

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Definitions:

Legal and Administrative Expenses

Costs associated with the legal operation of a business and general administrative tasks, including legal fees, licensing, and managerial salaries.

Bankruptcy

is a legal process through which individuals or businesses unable to meet their financial obligations can seek relief from some or all of their debts.

Weighted Average Cost of Capital

A calculation of a firm's cost of capital, wherein each category of capital is proportionally weighted.

Interest Tax Shield

A deduction that companies can take from their taxable income for the interest payments they have made on their debt, effectively reducing their taxable income.