Expected real income to remain unchanged

Reference no: EM13695232

Assume that your current income is $50,000 per year and you expect inflation to be 5 percent over the next year

a. What must your nominal income be next year for your expected real income to remain unchanged? Briefly explain how you arrived at your answer.

b. Briefly explain what will happen to your real income if your nominal income remains unchanged next year and inflation has been 5 percent.

Reference no: EM13695232

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