What does it mean when a worker experiences a decrease in real wages?
A) The worker's purchasing power declines.
B) The worker's nominal wage declines.
C) The worker's after-tax nominal wage declines.
D) The worker's nominal wage rises.

Question

What does it mean when a worker experiences a decrease in real wages?  
A) The worker's purchasing power declines. 
B) The worker's nominal wage declines. 
C) The worker's after-tax nominal wage declines. 
D) The worker's nominal wage rises.

Quizplus · Accepted Answer

When a worker experiences a decrease in real wages, it means that even though their nominal wage may stay the same or even increase, the actual purchasing power of their wages has decreased due to inflation or other factors.

What Does It Mean When a Worker Experiences a Decrease