If a Person's Nominal Income Increases by 5 Percent While

question 195

Multiple Choice

If a person's nominal income increases by 5 percent while the price level increases by 2 percent, then that person's real income

• A) increases by 3 percent.
• B) increases by 5 percent.
• C) decreases by 7 percent.
• D) decreases by 2 percent.

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Definitions:

Note Payable

A written promise to pay a specific amount of money, usually with interest, by a certain date.

Money Borrowed

Funds that have been provided by one party to another under the condition that it will be returned, often with interest.

Monetary Unit Assumption

An accounting principle that assumes transactions and events can be expressed in monetary units for recording and reporting.

Quantified In Terms

To describe or express something as a quantity or in numerical terms.