If prices (as measured by the CPI)tripled and nominal wages tripled,what would happen to real wages?
A) They would triple.
B) They would remain unchanged.
C) They would increase by one-third.
D) They would decrease by one-third.
E) They would increase by a factor of nine.

Question

Quizplus · Accepted Answer

Real wages are calculated by dividing nominal wages by the price level (as measured by the CPI). If prices tripled and nominal wages tripled as well, the ratio of nominal wages to prices would remain unchanged. Therefore, real wages would not be affected and would remain unchanged.

If Prices (As Measured by the CPI)tripled and Nominal Wages