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4 February, 04:41

In 2017 Sabrina earned an annual salary of $100,000 as an engineer. In 2018, her income rose to $105,000. The inflation rate in 2018 was 2%. How did Sabrina's nominal income and real income change in 2018 compared to 2017?

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Nominal income increased and real income increased

no

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  1. 4 February, 06:46
    0
    Both Sabrina's nominal and real income increased

    Explanation:

    Her nominal income during 2017 was $100,000 and it increased to $105,000 during 2018, a $5,000 increase.

    Sabrina's real income during 2017 was $100,000 (using 2017 as the base year), and her real income during 2018 was = $105,000 / 1.02 = $102,941. That means that her real income increased by $2,941
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