In 2002 Ortega's nominal income rose by 4.6 percent and the price level rose by 1.6 percent. We can conclude that Ortega's real income: a may have either increased or decreased. b rose by 6.2 percent. c rose by 3 percent. d fell by 13 percent.

Which of the following best explains why the demand for housing is more flexible than the supply? a. new housing developments are being constructed all the time. b. low interest rates for mortgages make buying a home very affordable. c. the increasing population always drives demand upwards. d. people can move more easily than producers can build new homes.