Jim's Nominal Wage Increased by 3%, and the Prices of Goods

question 111

Multiple Choice

Jim's nominal wage increased by 3%, and the prices of goods that Jim buys increased by 2%. Jim's real wage has:

• A) remained constant.
• B) decreased.
• C) increased.
• D) changed by 5%, but the direction of the change is ambiguous.

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Definitions:

Ending Owner's Equity

Ending Owner's Equity represents the final amount of owner's equity in a business at the conclusion of an accounting period, after accounting for all additions and deductions.

Withdrawals

Withdrawals typically refer to amounts of money taken out from a bank account, but in business, it can also mean money taken out by the owner for personal use, reducing the capital account.

Net Income

The total revenue minus total expenses, indicating the company’s profit or loss over a specific accounting period.

Accrued Salaries

Salaries that have been earned by employees but have not yet been paid by the company.