The nominal annual wage increases from $25,000 to $27,000, while the price level increases by 6 percent. In this case, the percentage change in the real annual wage is about
A)8 percent.
B)10 percent.
C)14 percent.
D)2 percent.

Question

Quizplus · Accepted Answer

The nominal wage increase is 8% (($27,000 - $25,000) / $25,000 * 100). The real wage increase is the nominal increase minus the inflation rate: 8% - 6% = 2%.

The Nominal Annual Wage Increases from $25,000 to $27,000, While