Hungry Jacks is paying $9 an hour to its workers.If the expected inflation rate equals the actual inflation rate and both are 10 per cent a year,then to keep the real wage rate constant in a year the money wage rate must

Question

Quizplus · Accepted Answer

To keep the real wage rate constant, the money wage rate must increase by the same percentage as the inflation rate. In this case, the inflation rate is 10%, so the money wage rate must also increase by 10%.

$9.00 + (10% x $9.00) = $9.90

Therefore, the money wage rate must rise to $9.90 an hour.

Hungry Jacks Is Paying $9 an Hour to Its Workers