Asked by Sheri Walton on Jul 24, 2024
Verified
An associate professor of physics gets a $200 a month raise. With her new monthly salary she can buy more goods and services than she could buy last year.
A) Her real and nominal salary have risen.
B) Her real and nominal salary have fallen.
C) Her real salary has risen and her nominal salary has fallen.
D) Her real salary has fallen and her nominal salary has risen.
Real Salary
The purchasing power of an individual's income, taking into account the effect of inflation on spending power.
Nominal Salary
The amount of money earned by an employee before any deductions or adjustments for inflation.
Goods and Services
Physical products (goods) and intangible benefits (services) that fulfill consumers' needs or desires.
- Identify the differences between nominal and real variables and understand their relevance in economic research.
Verified Answer
GI
Gaukhar IsmailovaJul 30, 2024
Final Answer :
A
Explanation :
Her nominal salary has increased because she is receiving $200 more each month. Her real salary has also increased because she can buy more goods and services than before, indicating that her purchasing power has improved.
Learning Objectives
- Identify the differences between nominal and real variables and understand their relevance in economic research.
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