During a particular year,nominal wages increased by 4 percent but real wages declined by 2 percent.This implies that the price level increased by 6 percent.

Question

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Nominal wages increasing by 4% while real wages declined by 2% implies that the cost of living (or price level) increased at a rate that not only absorbed the 4% nominal wage increase but also reduced purchasing power by an additional 2%, totaling a 6% increase in the price level.

During a Particular Year,nominal Wages Increased by 4 Percent but Real