If the nominal wages of carpenters rose by 5 percent in 2019 and the price level decreased by 3 percent, then the real wages of carpenters
A)decreased by 2 percent.
B)increased by 8 percent.
C)increased by 2 percent.
D)increased by 5 percent.

Question

Quizplus · Accepted Answer

Real wages adjust for inflation, showing the purchasing power of earnings. A 5% nominal wage increase combined with a 3% decrease in the price level effectively boosts real wages by 8%, as workers can buy more with their earnings.

If the Nominal Wages of Carpenters Rose by 5 Percent