If the actual price level is above the expected price level, then workers' actual real wage will be below their expected real wage.

Question

Quizplus · Accepted Answer

When the actual price level is above the expected price level, the money wage (nominal wage) does not adjust immediately, leading to a decrease in the purchasing power of the wages workers receive. Consequently, their actual real wage is lower than what they anticipated based on their expected price level.

If the Actual Price Level Is Above the Expected Price