Economics: A Contemporary Introduction 9th Edition by William McEachern

Exercise 4

NOMINAL AND REAL WAGES Complete each of the following sentences:
a. The _______ wage measures the wage rate in dollars of the year in question, while the _______ wage measures it in constant dollars.
b. Wage agreements are based on the _______ price level and negotiated in _______ terms. Real wages are then determined by the _______ price level.
c. The higher the actual price level, the _______ is the real wage for a given nominal wage.
d. If nominal wages are growing at 2 percent per year while the annual inflation rate is 3 percent, then real wages change by _______.