In 1992,the base year,you were earning $500/week.Your wages rose to $900 in 2001,the current year,when the Consumer Price Index stood at 150.What statement can you make about what happened to your real wages over this period?

Question

Quizplus · Accepted Answer

To determine the real wages, we need to adjust for inflation. We can do this by using the formula: Real Wage = Nominal Wage / CPI x 100. Using the given values, we get: Real Wage in 1992 = 500 / 100 x 100 = 500. Real Wage in 2001 = 900 / 150 x 100 = 600. Therefore, we can conclude that the real wages increased from $500 to $600, indicating a rise.

In 1992,the Base Year,you Were Earning $500/week