Question

Nominal incomes generally increase with inflation because:

 

(i) even anticipated inflation causes average nominal incomes to fall as prices increase.

(ii) when inflation is​ anticipated, real incomes also increase by the same percentage as inflation.

(iii) when inflation is​ unanticipated, average nominal incomes also increase by the same percentage as inflation.

(iv) when inflation is​ anticipated, average nominal incomes also increase by the same percentage as the rate of inflation.