If the Number of Dollars You Receive Every Year Is

question 79

Multiple Choice

If the number of dollars you receive every year is the same,but prices are rising,then your nominal income:

• A) Rises but your real income falls.
• B) Rises and your real income rises.
• C) Stays the same but your real income falls.
• D) Stays the same but your real income rises.

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Definitions:

Fair Value

A measurement of the price at which an asset could be bought or sold, or a liability settled, in a current transaction between willing participants in the market.

Economic Life

The estimated period over which an asset is expected to be economically usable by one or more users, with profitability considered.

Residual Value

The estimated value that an asset will realize upon the end of its useful life, often used in calculating depreciation.

Straight-Line Method

A depreciation method that allocates the cost of an asset evenly over its useful life.