Question

If real income rises from $5 trillion to $6 trillion while the price level increases by 10 percent, it follows that nominal income:

Answer 1

The nominal income will increase with the increase in the real income.

Explanation:

Real income of the person is the buying or the purchasing capacity of the person. It is the nominal income adjusted for inflation. If there is an increase in the real income more than the increase in the level of the prices at a particular period of time, it means that the level of nominal income of the person will also increase.