The real wage will rise if the nominal wage
A)falls more rapidly than the general price level.
B)increases at the same rate as labor productivity.
C)increases more rapidly than the general price level.
D)falls at the same rate as the general price level.

Question

Quizplus · Accepted Answer

Real wage refers to the purchasing power of wages, i.e., how much goods and services wages can buy. It rises if the nominal wage (the wage in current dollar terms) increases more rapidly than the general price level (inflation), because workers can buy more with their wages.

The Real Wage Will Rise If the Nominal Wage