Suppose You Hold $50 to Buy Groceries Weekly and Then

Multiple Choice

Suppose you hold $50 to buy groceries weekly and then the price of groceries increases by 5 percent. To be able to buy the same amount of groceries, what must happen to your nominal money holdings?

A) They must increase by $5.
B) They can decrease by $5.
C) They must increase by $2.50.
D) They must increase, but the amount of the increase depends on income.