If Your Income Increases 20% in a Year in Which

question 38

Multiple Choice

If your income increases 20% in a year in which inflation is 10%, your real income has

• A) increased 30%.
• B) increased 10%.
• C) decreased 30%.
• D) decreased 10%.

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Definitions:

Treasury Stock

Shares that were issued and subsequently reacquired by the company, held in the company's treasury, and are not considered when calculating earnings per share or dividends.

Bonds Payable

A form of long-term debt issued by corporations or governments that promises to pay the bondholder a specified sum of money at future dates.

Consolidated Income Statement

A financial statement that aggregates the income and expenses of a parent company and its subsidiaries, presenting a unified financial performance.

Interest Expense

The cost incurred by an entity for borrowed funds, typically recognized on the income statement.