The real wage of workers increases when the nominal wage _____ by 5% and the overall price level _____.
A) increases; increases by 10%
B) decreases; decreases by 5%
C) increases; increases by 5%
D) decreases; decreases by 10%

Question

Quizplus · Accepted Answer

The real wage increases when the nominal wage decreases by a smaller percentage than the overall price level, leading to an increase in purchasing power.

The Real Wage of Workers Increases When the Nominal Wage