To Compare the Purchasing Power of Nominal Wages in Two

question 80

Multiple Choice

To compare the purchasing power of nominal wages in two different years,one must

• A) compare the nominal values.
• B) deflate both quantities by a common price index.
• C) increase both quantities by the same percentage increase in a price index.
• D) adjust both quantities by the real interest rate.
• E) calculate the relative price change for both quantities.

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