Which of the following is correct?
A) The nominal wage may fall, but the real wage can never decline.
B) The real wage may fall, but the nominal wage can never decline.
C) Both the nominal and the real wage must always rise.
D) The nominal and the real wage may both fall.

Question

Quizplus · Accepted Answer

The correct answer is D because nominal wages can decrease due to factors such as changes in labor market conditions or contractual agreements, while the real wage can also decrease if inflation is higher than the nominal wage decrease. Therefore, it is possible for both the nominal and real wage to fall. Choice A is incorrect because the real wage can decrease due to inflation, even if the nominal wage stays the same or decreases. Choice B is incorrect because nominal wages can decrease, as explained above. Choice C is incorrect because it is not always feasible for both nominal and real wages to increase due to factors such as economic downturns or recessions.

Which of the Following Is Correct