Question

An assistant manager at a restaurant gets a $100 a month raise. He figures that with his new monthly salary he cannot buy as many goods and services as he could buy last year. a. His real salary has risen and his nominal salary has fallen. b. His real salary has fallen and his nominal salary has risen. c. His real and nominal salary have fallen. d. His real and nominal salary have risen.

Answer 1

b. His real salary has fallen and his nominal salary has risen.

Step-by-step explanation:

If the assistant manager's salary rose but he can't afford the goods he used to buy last year , it means that his nominal salary rose.

Nominal salary is the sum of real salary and inflation rate.

Real salary is nominal salary less inflation rate.

Real salary measures the purchasing power of salary.

If with the salary increase, the assistant manager could buy more goods compared to last year, both nominal and real salary increased.

I hope my answer helps you.