The real wage in Fantasyland has been constant since 1950.The nominal wage in 2015 was $100,and the Consumer Price Index (CPI)was 200 in 2015.What was the nominal wage in 2002 if the CPI was 50 in 2002?
A) Nominal wage = $25
B) Nominal wage = $400
C) Nominal wage = $100
D) Nominal wage = $250

Question

Quizplus · Accepted Answer

The real wage is constant, so the nominal wage is proportional to the CPI. In 2015, the nominal wage was $100 and the CPI was 200. In 2002, the CPI was 50, so the nominal wage in 2002 was $100 * 50 / 200 = $25.

The Real Wage in Fantasyland Has Been Constant Since 1950