Recently a teachers' union argued that the standard of living of teachers working for the school district was falling. The negotiating team for the school board replied that this was not true because the teachers had received significant increases in nominal income through collective bargaining. Could the union statement be correct?
A. Yes, because real income may fall if price increases are proportionately smaller than the increases in nominal income.
B. No, because real income may rise if price increases are proportionately greater than declines in nominal income.
C. Yes, because real income may fall if price increases are proportionately greater than the increases in nominal income.
D. No, because real income may rise if price increases are proportionately greater than the increases in nominal income.
Answer: C
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