Suppose the Price Level Rises by 5 Percent and the Nominal

question 109

Multiple Choice

Suppose the price level rises by 5 percent and the nominal wage rises by 3 percent.How is the real wage affected?  

• A) It falls by 8 percent. 
• B) It falls by 2 percent. 
• C) It rises by 8 percent. 
• D) It rises by 2 percent.

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Definitions:

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