If the percentage increase in nominal wage rates is less than the percentage increase in the price level, then:
A)real wage rate rises and the unemployment rate falls.
B)both real wage rate and the unemployment rate rises.
C)both real wage rate and the unemployment rate falls.
D)real wage rate rises and the unemployment rate remains unchanged.
E)both real wage rate and the unemployment rate remains unchanged.

Question

Quizplus · Accepted Answer

When nominal wages increase by less than the price level, real wages fall, potentially leading to lower unemployment as labor becomes cheaper.

If the Percentage Increase in Nominal Wage Rates Is Less