Your boss gives you an increase in the number of dollars you earn per hour,from $11 to $12.How does this change your nominal and real wages?

Question

Quizplus · Accepted Answer

The increase in pay from $11 to $12 increases your nominal wage. If the price level remains constant, this increase in nominal wage also increases your real wage. However, if the price level increases proportionally more than your nominal wage, then your real wage would decrease. Therefore, if your nominal wage increased by a greater percentage than the price level, then your real wage also increased.

Your Boss Gives You an Increase in the Number of Dollars