Suppose Frank received a 5 percent increase in his nominal wage.Over the year, inflation ran about 2 percent.Which of the following describes how Frank's nominal and real wages were affected?

Question

Quizplus · Accepted Answer

Frank's nominal wage increased due to the 5 percent wage increase. His real wage also increased because the wage increase exceeded the inflation rate of 2 percent, meaning his purchasing power improved.

Suppose Frank Received a 5 Percent Increase in His Nominal