Norma Complains That She Is Not Receiving the Full Benefit

Multiple Choice

Norma complains that she is not receiving the full benefit of her six percent raise,because inflation is two percent.You tell her that nominal incomes tend to rise with inflation,therefore

A) she really is worse off.
B) her real income increased eight percent.
C) menu costs have reduced her purchasing power.
D) she is committing the inflation fallacy.