To compare the purchasing power of nominal wages in two different years, one must:
A)compare the nominal values.
B)deflate both quantities by a common price index.
C)increase both quantities by the same percentage increase in a price index.
D)adjust both quantities by the real interest rate.

Question

Quizplus · Accepted Answer

Deflating is the process of dividing a nominal value by a price index to obtain the real value.

To Compare the Purchasing Power of Nominal Wages in Two