Suppose that Colleen's nominal wage rate was $20 per hour in 1998,the base year for the CPI.If the CPI in 2003 was 120.0 and her nominal wage had risen to $22 per hour,what was her real wage in 2003?
A) $16.67
B) $18.33
C) $22.00
D) $26.40
E) her real wage for 2003 cannot be determined with the information given

Question

Quizplus · Accepted Answer

To find Colleen's real wage in 2003, we need to adjust her nominal wage rate for inflation using the CPI. The formula for the real wage is: Real Wage = Nominal Wage / CPI * 100. Plugging in the numbers, we get: Real Wage = $22 / 120.0 * 100 = $18.33. Therefore, the answer is B, $18.33.

Suppose That Colleen's Nominal Wage Rate Was $20 Per Hour