Assume That Ernesto Earned a Nominal Wage Rate of $15

question 89

Multiple Choice

Assume that Ernesto earned a nominal wage rate of $15 per hour in 2001,the base year for the CPI.If the CPI in 2002 was 102.6 and his nominal wage rate was $16 per hour,what was his real wage rate in 2001?

• A) $14.62
• B) $15.00
• C) $15.59
• D) $16.00
• E) His real wage for 2001 cannot be determined with the information given.

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Definitions:

Accruals

Adjustments in accounting for income that has been generated but not yet documented, and for costs that have been accrued but not yet documented.

Working Capital Needs

The funds required to finance the day-to-day operations of a business, including managing its short-term assets and liabilities.

Explicit Interest

The stated interest rate on a loan or financial instrument, not including the effects of compounding or any hidden charges.

Factoring

Financing method where a firm sells its accounts receivables, usually to a specialized financing company, at a discount to their full value.