Suppose You Received a 5 Percent Increase in Your Nominal

question 13

Multiple Choice

Suppose you received a 5 percent increase in your nominal wage. Over the year, inflation ran about 2 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 your nominal and real wages increased.

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Definitions:

Commerce Clause

The Commerce Clause is a provision in the U.S. Constitution granting Congress the power to regulate trade and commerce among the states, with foreign nations, and with Native American tribes.

Federal Government

The governing body of a nation, state, or community that operates at the national level, making and enforcing laws over a certain territory.

Judicial Review

The power of courts to assess the constitutionality of legislative acts or government actions.

U.S. Constitution

The supreme law of the United States, establishing the framework of the national government and the rights of the citizens.