Assume that your nominal wage was fixed at $15 an hour, and the price index rose from 100 to 105. In this case, your real wage has
A) decreased to $10.
B) increased to $15.75.
C) decreased to $14.29.
D) increased to $20.

Question

Quizplus · Accepted Answer

Real wage = Nominal Wage / Price Index
Initial Real Wage = 15 / 100 = $0.15
New Real Wage = 15 / 105 = $0.1429
Therefore, the real wage has decreased to $14.29.

Assume That Your Nominal Wage Was Fixed at $15 an Hour