Question

help! Suppose you received a 3 percent increase in your nominal wage. Over the year, inflation ran about 6 percent. Which of the following is true? a. Your real wage fell. b. Your nominal wage fell. c. Both your nominal and real wages decreased. d. Although your nominal wage fell, your real wage increased. e. Both nominal and real wages increased.

Answer 1

Answer: Option 'a' is correct.

Explanation:

As we know that

Nominal wage is the value of wage in dollars that a particular person gets, whereas the real wage is the value of wage he is actually used that shows the purchasing power of a particular person.

If the wage is increased by 3%, and the inflation is increased by 6%.

Then, the nominal wage has increased but real wage decreased due to increase in inflation.

Hence, option 'a' is correct.