Suppose you received a 4 percent increase in your nominal wage.Over the year,inflation runs about 7 percent.Which of the following is true?
A)Your real wage increased.
B)Both the nominal and real wages increased.
C)Both your nominal and real wages decreased.
D)Although your nominal wage fell,your real wage increased.
E)Although your nominal wage rose,your real wage decreased.

Question

Quizplus · Accepted Answer

Even though the nominal wage increased by 4%, the inflation rate was 7%, which means the real wage decreased by 3%. Therefore, the correct answer is E.

Suppose You Received a 4 Percent Increase in Your Nominal