A person's real income will increase by 5% if her nominal income increases by
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A person's real income will increase by 3% if her nominal income increases by select one: a. 5% while the price index falls by 2%. b. 5% while the price index rises by 2%. c. 2% while the price index rises by 5%. d. 2% while the price index falls by 5%.
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If the growth rate of nominal income is larger than the rate of inflation, then the real value of income has increased. The real value of income is adjusted for inflation, and it reflects the actual purchasing power or the amount of goods and services that can be bought with a given income. a increased since the nominal income has grown faster than the price index. b decreased since the nominal income has grown faster than the price index. c decreased since the real income has grown slower than the price index. d increased since the real income has grown faster than the price index.
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'When real interest rates rise_ consumption will shift: downward if income rises as well downward if there is saving upward if the substitution effect outweighs the income effect upward if the income effect outweighs the substitution effect'
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