If a price index changed from 150 in 2008 to 148.5 in 2009,while Jim Bob's nominal wage fell from $25 to $24,then Jim Bob is
A)Better off like everyone else in the economy since prices are lower for consumers.
B)Neither better nor worse off since his real wage remained constant.
C)Better off since his nominal wage fell slower than the price level did.
D)Worse off since his nominal wage fell faster than the price level did.

Question

Quizplus · Accepted Answer

Jim Bob's nominal wage fell by $1, or 4%, while the price level only fell by 1% (150 to 148.5 is a 1% decrease). This means that Jim Bob's real wage, which is his nominal wage adjusted for inflation, fell by more than the overall price level, making him worse off.

If a Price Index Changed from 150 in 2008 to 148.5