If the nominal wage rises by 6 percent and the price level falls by 2 percent, the real wage will
A)be unaffected.
B)rise by 4 percent.
C)rise by 8 percent.
D)fall by 4 percent.

Question

Quizplus · Accepted Answer

The real wage increases by approximately 8 percent because the nominal wage increase of 6 percent combines with a 2 percent decrease in the price level, effectively boosting the purchasing power of the wage by 8 percent.

If the Nominal Wage Rises by 6 Percent and the Price