Suppose That the Real Wage Remained Unchanged Between Year 1

question 76

Multiple Choice

Suppose that the real wage remained unchanged between year 1 and 2 but the nominal wage was $20 in year 1 and $18 in year 2.How was the price level affected?  

• A) It rose by 20 percent. 
• B) It rose by 25 percent. 
• C) It fell by 10 percent. 
• D) It fell by 20 percent.

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Definitions:

Bystander Effect

A social psychological phenomenon where individuals are less likely to offer help to a person in need when other people are present.

Commotion

Disturbance or turmoil caused by a large amount of noise and confusion.

Social Exchange Theory

A sociological and psychological theory that studies the social behavior in the interaction of two parties that implement a cost-benefit analysis to determine risks and benefits.

Equity

The concept of fairness or justice in the way people are treated, often related to social, economic, and legal contexts.