If Nominal Wage Rates Increase by 5 Percent Per Year

question 42

Multiple Choice

If nominal wage rates increase by 5 percent per year and the price level increases by 3 percent per year,which of the following is correct?

• A)real wages increase by 2 percent per year
• B)real wages increase by 3 percent per year
• C)real wages decrease by 3 percent per year
• D)real wages decrease by 2 percent per year
• E)real wages remain constant

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