If the Price Level Rises by 5 Percent and the Nominal

question 194

Multiple Choice

If the price level rises by 5 percent and the nominal wage rises 3 percent,the real wage

• A)falls by 2 percent
• B)falls by 8 percent
• C)rises by 2 percent
• D)rises by 8 percent
• E)remains constant

---

Definitions:

Least-Cost Combination

The least-cost combination is an economic principle that refers to the mix of factors of production that minimizes costs for a given level of output.

Resources

Inputs used in the production of goods and services, such as labor, capital, land, and entrepreneurship.

Output

The total amount of goods or services produced by a company, industry, or economy over a specific period of time.

Least-Cost Combination

is an economic principle where firms aim to produce a given output at the minimum possible cost by choosing the optimal combination of inputs.