If Nominal Income Increases,then Real Income

question 73

Multiple Choice

If nominal income increases,then real income

• A) increases.
• B) increases if the price index falls.
• C) increases if the percent increase in price index rises by more than the percent change in nominal income.
• D) increases if you buy only the goods included in the consumer price index (CPI)and the majority of those goods get cheaper.
• E) decreases.

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Definitions:

Discarding

The act of getting rid of something that is no longer useful or desired, within a context like inventory management or manufacturing.

Fixed Assets

Permanent tangible properties engaged in business operations, which are unlikely to be used up or exchanged for cash in the span of a year.

Goodwill

An intangible asset that is created from such favorable factors as location, product quality, reputation, and managerial skill.

Competitive Advantage

An advantage that allows a business to generate greater sales or margins compared to its market competitors, often through unique resources, capabilities, or efficiencies.