In a particular year,if the price level rises by 4 percent and the nominal wage of workers rises by 6 percent,we can conclude that the real wage has:
A)fallen by 2 percent.
B)fallen by 10 percent.
C)increased by 2 percent.
D)increased by 10 percent.
E)remained constant.

Question

Quizplus · Accepted Answer

The real wage has increased by 2 percent because the nominal wage increase (6 percent) outpaces the price level increase (4 percent), effectively increasing the purchasing power of the workers' wages.

In a Particular Year,if the Price Level Rises by 4