Refer to the information provided in Table 15.2 below to answer the questions that follow.
Table 15.2
-Refer to Table 15.2. From 2015 to 2016 the real wage
A) rises.
B) falls.
C) stays the same.
D) rises then falls.

Question

Refer to the information provided in Table 15.2 below to answer the questions that follow.
Table 15.2 
-Refer to Table 15.2. From 2015 to 2016 the real wage
A) rises. 
B) falls. 
C) stays the same. 
D) rises then falls.

Quizplus · Accepted Answer

From 2015 to 2016, the nominal wage increased from $50,000 to $55,000. However, the CPI also increased from 100 to 110, indicating a rise in the overall price level. To find the real wage, we divide the nominal wage by the CPI (in hundredths), giving us $50,000/100 = $50,000 in 2015 and $55,000/110 = $50,000 in 2016 (rounded to the nearest dollar). Therefore, the real wage stayed the same, indicating a decrease in purchasing power.

Refer to the Information Provided in Table 15