Question

The payments you make on your automobile loan are given in terms of dollars. As prices rise you notice you give up fewer goods to make your payments. _____________

Answer 1

Step-by-step explanation:

The scenario in this question happens because the dollar amount you pay for the loan is a nominal value, meaning the face value of when it was issued and not its market value. While the number of goods you give up is a real value. In other words, the goods you give up have a real value which is adjusted for inflation and is measured based on the value of other items. Which is why you notice giving up fewer goods because they are worth more every time.