Which of the following best describes the relationship between a worker's real wage and nominal wage when there is no inflation?

Choose 1 answer:
(A) Real wage is lower than nominal wage
(B) Both real and nominal wage decrease, but in different amounts
(C) Real wage and nominal wage are the same
(D) Both real and nominal wage increase, but in different amounts
(E) Real wage is higher than nominal wage

Question

Which of the following best describes the relationship between a worker's real wage and nominal wage when there is no inflation?

Choose 1 answer:
(A) Real wage is lower than nominal wage
(B) Both real and nominal wage decrease, but in different amounts
(C) Real wage and nominal wage are the same
(D) Both real and nominal wage increase, but in different amounts
(E) Real wage is higher than nominal wage

Accepted Answer

***C*** ∻Key Concept∻ ⚹Real vs. Nominal Wages⚹ ∻Explanation∻ ⚹Real wage is the purchasing power of a worker's earnings, while nominal wage is the amount of money earned without adjusting for inflation. When there is no inflation, the real wage and nominal wage are equivalent because the purchasing power of the currency remains constant.⚹◊What is the formula for calculating the real wage?⍭ Generate me a similar question◊

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