Ask Question
14 November, 04:45

Suppose that a person's nominal income rises by 5 percent and the price level rises from 125 to 130. The person's real income will

a) rise by about 4 percent.

b) rise by about 1 percent.

c) remain constant.

d) fall by about 1 percent.

+4
Answers (1)
  1. 14 November, 06:37
    0
    b) rise by about 1 percent

    Explanation:

    Given that a person's nominal income rises by 5 percent and the price level rises from 125 to 130.

    Percentage increase in price level = (130 - 125) / 125

    = 5/125

    = 1/25 = 4%

    Difference between rise in the person's nominal income and rise in price level

    = 5% - 4%

    = 1%

    Hence the right option is b) rise by about 1 percent.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Suppose that a person's nominal income rises by 5 percent and the price level rises from 125 to 130. The person's real income will a) rise ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers