If Nominal Wages Increase by 4 Percent While Real Wages

question 122

Multiple Choice

If nominal wages increase by 4 percent while real wages remain constant, the inflation rate must be

• A) -2 percent.
• B) 0 percent.
• C) 2 percent.
• D) 4 percent.

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Definitions:

Higher Wage

Refers to an increase in the amount of money that an employee receives for performing one hour or another standard unit of work.

Leisure Time

Free time that an individual can spend away from work, chores, and other compulsory activities, often used for relaxation or hobbies.

Labor Supply Curve

A visual diagram illustrating how the quantity of labor supplied is influenced by changes in the wage rate.

Leisure

Free time available to individuals when they are not engaged in work or essential activities, often used for relaxation or recreation.