If wages rise by 12 percent at the same time prices rise by 3 percent, then the increase in real wages is equal to
A)12 percent.
B)9 percent.
C)6 percent.
D)3 percent.

Question

Quizplus · Accepted Answer

Real wages are calculated by adjusting wages for inflation. In this case, wages have increased by 12 percent, but prices have also increased by 3 percent. Therefore, the real increase in wages is 12 percent - 3 percent = 9 percent.

If Wages Rise by 12 Percent at the Same Time