Which of the Following Statements About the Nominal and Real

question 6

Multiple Choice

Which of the following statements about the nominal and real wage rates is correct?

• A) The nominal wage rate is measured in the dollars of a base year.
• B) The real wage rate indicates how many goods and services can be purchased with an hour's labour.
• C) The nominal wage rate equals the real wage rate divided by the CPI and then multiplied by 100.
• D) The real wage rate is measured in current year dollars.
• E) The real wage rate equals the nominal wage rate multiplied by the CPI then divided by 100.

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Definitions:

Payments

The act of transferring money or its equivalent in exchange for goods, services, or to fulfill a legal obligation.

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance.

Variable Costs

Expenses that vary directly with the level of production or output, including costs such as raw materials and labor directly involved in manufacturing.

Price Changes

Alterations in the cost of goods or services over time, which can be influenced by factors such as supply and demand.