A Labour Contract Provides for a First-Year Wage of $15

question 56

Multiple Choice

A labour contract provides for a first-year wage of $15 per hour,and specifies that the real wage will rise by 2% in the second year of the contract and by another 2% in the third year.The consumer price index (CPI) is 100 in the first year,109 in the second year,and 115 in the third year.What dollar wage must be paid in the third year?

• A) $15.00 per hour.
• B) $15.30 per hour.
• C) $15.61 per hour.
• D) $17.24 per hour.
• E) $17.95 per hour.

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Definitions:

Wage Earnings

Income received by an individual in return for labor or services performed, usually calculated on an hourly, daily, or piecework basis.

Remittances

Money sent by migrants to their home country or region, usually to family members, contributing significantly to the economy of the recipient area.

Industrial Nations

Countries that have a developed industrial base and a significant level of economic activity in the manufacturing sector.

Developing Nations

Countries with a lower standard of living, underdeveloped industrial base, and lower Human Development Index relative to other countries.