If inflation is 6 percent and a worker receives a 4 percent wage increase, then the worker's real wage:

Question

Quizplus · Accepted Answer

Inflation at 6 percent means that prices for goods and services are increasing at a rate of 6 percent. If the worker receives a 4 percent wage increase, it is less than the rate of inflation, meaning the worker's purchasing power has decreased by 2 percent (6 percent inflation minus 4 percent wage increase). Therefore, the worker's real wage has decreased by 2 percent.

If Inflation Is 6 Percent and a Worker Receives a 4