Suppose That the Real Wage Remained Unchanged Between Year 1

question 54

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.What is true about the price level?

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

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Definitions:

Par Value

The face value of a bond or the stock value stated in the corporate charter, not necessarily related to its market value.

Fair Value

The estimated price at which an asset or liability could be traded in a fair transaction between willing parties.

Stock Issuance Costs

Expenses incurred by a company to register and issue shares of stock, such as legal, accounting, and printing costs.

Voting Shares

Shares of a corporation's stock that grant the shareholder the right to vote on corporate matters, such as the election of the board of directors.