Asked by Daysi Antillo on Jul 25, 2024
Verified
An economy produces two goods, x and y. A year ago the price of x was $4 and the price of y was $6. Today the price of x is $8 and the price of y is $10. What happened to the nominal and the real value of good x? What happened to the nominal and real value of good y?
Nominal Value
The face value of a currency or security, not adjusted for inflation or interest; the stated value.
Real Value
The value of an object, good, or service that has been adjusted for inflation, representing the purchasing power over time.
Good X
A placeholder term often used in economics to represent a generic good or product in theoretical models and discussions.
- Gain an understanding of the effects price level changes have on money valuation and personal financial wealth.
Verified Answer
BM
Blake MorrisJul 31, 2024
Final Answer :
Both the nominal and real value of good x rose.
The nominal value of good y rose but its real value fell.
The nominal value of good y rose but its real value fell.
Learning Objectives
- Gain an understanding of the effects price level changes have on money valuation and personal financial wealth.