If the Price Level Increases by 15 Percent While Nominal

question 98

Multiple Choice

If the price level increases by 15 percent while nominal income increases by 8 percent, then in percentage terms real income would:

• A)rise by about 8 percent.
• B)fall by about 8 percent.
• C)fall by about 7 percent.
• D)fall by about 15 percent.

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Definitions:

Share Losses

In investing, refers to the apportioning of financial losses among shareholders or partners in proportion to their ownership or interest in the enterprise.

Manufacturing Arrangement

A type of franchise in which the franchisor provides the franchisee with a formula or ingredient that is necessary to manufacture a product.

Distributorship

A business arrangement in which a manufacturer or supplier authorizes an entity to distribute its products.

Secret Formula

A proprietary and confidential composition or recipe that gives a product its unique characteristics and is closely guarded to maintain a competitive advantage.