If your real wage rose but your nominal wage fell, this would imply that: a) inflation is...
Question:
If your real wage rose but your nominal wage fell, this would imply that:
a) inflation is positive but less than the rate of increase in your wage.
b) inflation has occurred.
c) your boss took some of your wages illegally.
d) the overall price level has fallen more than your nominal wage.
e) housing prices have fallen, and because you own a house, it reduces the value of your real wage.
Wages and Inflation:
Everyone wants to get paid more but the nominal value of your wage means nothing. What matters instead is how many goods/services you can buy with your wage. Making $15 an hour was a lot 100 years ago but today it doesn't mean as much.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerAnswer: D
Real wages are nominal wages adjusted for inflation. You can think of it as %change in real wages = % change in nominal wages - % change in...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Price Level in Economics: Definition & Equation
from
Chapter 3 / Lesson 56
20K
Learn the definition of the price level in economics and understand how to calculate it. See the price level equation and find the popular ways to measure it.
Related to this Question
- If a person's real wage rose but their nominal wage fell, this would imply that A. inflation is positive but less than the rate of increase in your wage. B. inflation has occurred. C. your boss took some of your wages illegally. D. the overall price l
- If nominal wages increase by 5 percent while real wages fall by 1 percent, the inflation rate must be: a. 1 percent b. 4 percent c. 5 percent d. 6 percent
- Wages that do not respond quickly to changes in the inflation rate are A. flexible wages. B. decreasing wages. C. real wages. D. sticky wages.
- If your nominal wage rises faster than the price level, we can say your real wage has and the purchasing power of your income has. A. fallen; fallen B. fallen; risen C. risen; risen D. risen; fallen
- "The average hourly wage, adjusted for inflation, increased from $19 in 1990 to $22 in 2015, or 16% in 25 years," According to the statement above, how much of the increase in the wage was due to inflation, if the CPI was 135.9 in 1990 and 244.3 in 2015?
- If a worker's nominal income increases by 5% and the inflation rate increases by 3%, how did the worker's real income change? a) it fell by 2% b) it rose by 8% c) it rose by 5% d) it fell by 8% e) it rose by 2%
- Suppose that over the next year your nominal wage (in 2000 dollars) rises from $10 to $12 and the CPI rises from 120 to 130. Based on this, your real wage: A. fell by more than 5% B. fell by less than 5% C. rose by less than 15% D. rose by more than 15%
- Suppose that over the next year, your nominal wage (in 2000 dollars) rises from $10 to $12 and the CPI rises from 120 to 130. Based on this, your real wage: a. fell by more than 5%. b. fell by less than 5%. c. rose by less than 15%. d. rose by more than 1
- Without money illusion, a 10% increase in the price level will lead to a: a. 10% increase in the nominal wage, b. Less than 10% increase in the nominal wage, c. More than 10% increase in the nominal wage, d. 10% increase in the real wage, e. A 10% decreas
- Without money illusion, a 10% increase in the price level will lead to a: a. 10% increase in the nominal wage, b. Less than 10% increase in the nominal wage, c. More than 10% increase in the nominal wage, d. 10% increase in the real wage, e. A 10% de
- Cost push inflation is defined by an increase in price level and reduction in ________. A. unemployment B. wage rates C. real GDP D. inflation
- If prices rise by 4% in a year and nominal wages increase by only 2%, then real wages will A) decrease by 6%. B) decrease by 4%. C) decrease by 2%. D) increase by 2%.
- If real salaries increase but nominal salaries do not, this means that: a. the purchasing power of money has decreased. b. prices have not changed. c. prices have risen. d. prices have fallen.
- To increase your standard of living, your wages must: a. rise faster than the inflation rate. b. rise more slowly than the inflation rate. c. keep pace with the inflation rate. d. have a negative inflation rate.
- 1. Moving along the AS curve, when the price level increases, the a. Real wage rate falls, and there is an increase in the quantity of real GDP supplied b. Real wage rate rises, and there is an increa
- Which of the following is not an argument for maintaining a positive rate of inflation? A. It permits real interest rates to be negative. B. It allows real wages to fall without cuts in nominal wages. C. It increases the variability of relative prices. D.
- An increase in a person's real wage necessarily means: A) greater purchasing power. B) a lower nominal wage. C) a lower nominal wage after payment of taxes. D) a higher nominal wage. E) a higher nominal wage after payment of taxes.
- The often-made statement that inflation "greases the wheels of the labor market" means simply that: A. high and unanticipated inflation allows for real wage adjustments when nominal wages are sticky, thereby permitting labor market adjustments that improv
- Last year, the inflation rate was 12% and your nominal salary increased by 9%. What was the growth rate of your real salary?
- Inflation initiated by increases in wages or other resource prices is labeled. 1) demand-pull inflation. 2) demand-push inflation. 3) cost-push inflation. 4) cost-pull inflation.
- If the equilibrium real wage remains constant, what happens to the nominal wage when the actual inflation rate exceeds the expected inflation rate?
- The original Phillips curve implied that? A) the markup over labour costs is zero. B) the expected inflation rate is equal to last year's inflation rate. C) a lower rate of unemployment causes an increase in the rate of inflation. D) the inflation is a
- Is it possible for nominal wages to decrease while real wages increase? Explain.
- Inflation creates uncertainty because A. nominal values of prices and wages are unknown. B. it rapidly increases output. C. real interest rates, prices, and wages are unknown. D. borrowing continues at a rapid pace, creating a "false boom." E. althou
- When unemployment is above the natural rate, a) inflation rises. b) nominal wages decrease. c) wage-price spirals occur. d) the inflation rate falls.
- Nominal income must have fallen if real income: a. falls and there is inflation. b. falls and there is deflation. c. rises and there is inflation. d. rises and there is deflation.
- If Zia's real wages are decreasing although she has received salary raises each year a. Zia should quit her job b. Her purchasing power is decreasing c. The rate of inflation is likely decreasing d. Zia's nominal wages are rising faster than inflation e.
- If you earned $10-an-hour in 2005 when the CPI was 100, and you earn $11-an-hour today when the CPI is 120, then your real wage rate has since 2005. A. increased 10% B. decreased C. increased 20% D. remained the same
- If real wages are remaining unchanged during times of high inflation is the individual consumer hurt (in terms of their purchasing power) by the high inflation?
- Inflation in an economy implies that: a. real GDP is overstated due to the higher price level. b. the average price level has increased over a stated period of time. c. stores have increased their prices for no other reason than to earn more profit. d. th
- Alexander recently received a 6% pay raise for the same year the inflation rate is 4%. We conclude: a. nominal increase in rate of pay is 6% but real rate increased 2% b. real increase in rate of pay is 2% but nominal rate increased 10% c. nominal increas
- If your real income falls during a period of inflation, then your nominal income might have: a. increased more rapidly than the price level. b. increased at the same rate as the price level. c. incr
- An increase without inflation adjustment is called: A. a real increase B. a nominal increase C. a net increase D. an inflationary increase
- An increase in the expected inflation rate will lead in the short run to: A. a higher level of inflation and unemployment. B. a higher level of inflation and a higher level of output. C. a lower level of inflation and unemployment. D. a lower level of inf
- If inflation is 10 percent per year and you receive a 20 percent rise in income, then your: a. real and nominal incomes both fall. b. real and nominal incomes both rise. c. real income falls but nominal income rises. d. real income rises but nominal incom
- Suppose the real wage remains unchanged between year 1 and year 2 but the nominal wage increases from $20 to $24.Based on this information, we can conclude that the price level has: A) increased by 20
- Inflation caused by an increase in aggregate spending is referred to as: A. Cost-push inflation B. Anticipated inflation C. Demand-pull inflation D. Hyperinflation
- If your nominal income rose by 2.8 percent and your real income rose by 1.1 percent in some year, what must have been the rate of inflation?
- Does raising the minimum wage actually help the working poor or does it lead to inflation that perpetuates the status quo?
- Suppose you earned $50,000 last year, and inflation is at 5%. You receive a salary increase of $2,000. Explain your increase in salary in nominal and real terms. Did you receive an increase?
- An increase in expected inflation will affect the short-run Phillips curve: a. only if the economy is at the nonaccelerating inflation rate of unemployment. b. by moving along the same curve, where it equals the actual rate of inflation. c. by shifting
- If inflation is 8 percent per year and you receive a 15 percent rise in income, then your: a. real and nominal incomes both fall. b. real and nominal incomes both rise. c. real income falls, but your nominal income rises. d. real income rises, but your no
- Suppose you are currently earning $15 an hour. If the inflation rate over the current year is 10 percent and your firm provides a cost-of-living raise based on the rate of inflation, what would you expect to earn after your raise? If the cost-of-living ra
- 1. Inflation does not reduce purchasing power if: a) Prices of food and gasoline don't increase too much. b) Nominal wages also increase by the same rate. c) It remains under 10% per year. d) The
- Assume the inflation rate falls from 4 percent to 2 percent. This means that: a. the price level is increasing more slowly b. the economy is experiencing deflation c. real GDP is decreasing d. the price level has fallen
- People are more likely to accept a real wage cut that arises from an increase in the CPI than a cut in their nominal wage rare because _. Fill in the blank with one of these choices: a) inflation decr
- One reason the Fed tolerates ongoing inflation is because it: a. Believes that the CPI understates the actual inflation rate, b. Believes that the CPI overstates the actual inflation rate, c. Accepts the idea that a zero inflation rate would make labor ma
- On the issue of whether or not a little inflation helps reduce unemployment: A. Economists generally agree that it does not, because wages will rise along with inflation B. The issue is largely sett
- According to the classical theory of money, inflation does not make workers poorer because wages increase: a) Faster than the overall price level, b) More slowly than the overall price level, c) In proportion to the increase in the overall price level,
- A decrease in expected inflation will a. reduce real wages. b. increase the natural rate of unemployment. c. shift the long-run Phillips curve to the left. d. shift the short-run Phillips curve to the left.
- Will raising the minimum wage have an impact on inflation? Is high inflation a bigger problem than low wages for people struggling to make ends meet?
- In the 2001 recession unemployement rose to 6%, which is above the natural rate of unemployement of 5%. Suppose a Phillips curve equations. If expected inflation is 2% then what will wage inflation be
- Does the nominal wage decrease when there is a negative supply shock? What happens to the real wage?
- One benefit of moderate inflation is that it may help the economy by making real wages in labor markets: a. Constant b. More flexible c. Less flexible d. Increase
- Which of the following correctly describes a wage-price spiral? a. An increase in nominal wages causes inflation, and inflation causes workers to demand even higher wages in order to keep their real income constant. This cycle can repeat itself. b. An inc
- What are the real costs of inflation? A. Inflation doesn't have any costs. Money is completely neutral. B. It is harder to negotiate contracts when you don't know what the inflation rate will be, increasing the cost of doing business. C. Inflation lowers
- Between 1974 and 2006 prices for food commodities A) rose far faster than inflation. B) rose far slower than inflation. C) rose at about the overall rate of inflation. D) remained largely constant
- The inflation rate is the A) percent increase in the average level of prices over a year. B) percent increase in output over a year. C) percent increase in the unemployment rate over a year. D) price level divided by the level of output.
- The "Solow" growth rate is the rate of economic growth that occurs when A. inflation is moderate. B. prices and wages are sticky. C. prices and wages are flexible. D. the money supply is growing.
- Suppose that aggregate demand increases at a steady rate next year for the U.S. economy. If at the end of the year we observe that equilibrium real GDP has increased 3%, but there has been no inflation despite the fact that wages have also increased durin
- Suppose there's an unanticipated increase in the rate of inflation. Which of the following is likely to be true? a. Workers whose nominal wages are set at the beginning of the year are likely to suffer a decrease in real wages. b. Creditors who made loans
- After one year, a worker gets a 1% raise. The inflation rate for that year was 2%. Did the worker's real income increase, decrease, or remain the same?
- Deflation occurs when: a. price levels fall and the inflation rate is negative. b. price levels rise and the inflation rate is negative. c. price levels fall and the inflation rate is positive. d. price levels rise and the inflation rate is positive.
- If the actual unemployment rate is above the natural rate, we would expect that: A) the inflation rate is zero. B) the inflation rate is constant. C) the inflation rate is increasing. D) the infla
- If the CPI is rising more slowly than your nominal income, a. then there is no inflation in the economy. b. your real income is decreasing. c. your real income is increasing. d. your real income remains the same.
- Real gross domestic product a. is a measure of inflation b. will increase if there is an increase in the price level c. will increase if there is an increase in the level of output d. can change from
- a. Suppose that the nominal quatity of money, M, doubles once and for all the rise in the price level P, suggests that workers will be worse off. Is this correct? The rise in the nominal wage rate, w,
- Inflation occurs when the _______. a. value of real GDP decreases. b. value of money is rising. c. value of real consumption increases. d. general price level is rising.
- According to the data below, please show the percentage change: (a) How did nominal wages change between 2000 and 2002? (b) How did real wages (using 2000's CPI as base) change between 2000 and 2002? (c) How did real wages (using 2000's CPI as base) ch
- 1. When the price level rises but the money wage rate remains unchanged, unemployment .......... and the quantity of real GDP supplied .......... a) Decreases; increases. b) Decreases; decreases.
- Which of the following is NOT an argument for maintaining a positive rate of inflation? - It permits real interest rates to be negative. - It allows real wages to fall without cuts in nominal wages. - It increases the variability of relative prices. -
- Suppose workers and firms suddenly believe that inflation will be quite high over the coming year. Suppose also that the economy begins in long-run equilibrium, and the aggregate-demand curve does not shift. a) What happens to the nominal wages? What happ
- What does a short-run "Phillips curve" show? a) The rate of money-wage inflation for each level of possible unemployment and for a specific expected rate of inflation, b) The rate of money-wage inflation that is generated at full-employment, c) The rate o
- If the price of gasoline increased 100% during a period of time when inflation was 100%, then the real price of gasoline would: a) increase or decrease, depending on whether income had changed or not. b) decrease. c) remain constant. d) increase.
- Do higher wages always lead to inflation?
- A demand shock that increases real GDP above its full-employment level will, in the long run, a. lead to a higher wage rate and an upward shift of the aggregate supply curve. b. lead to a lower wage rate and a downward shift of the aggregate supply curve.
- If people expect that inflation is going to be 5% this year, they will try to get an increase in wages of 5% in the anticipation of the higher prices. Seeking higher wages in fact will cause inflation. This is the concept that underlies: a) Great expectat
- After one year, a worker gets a 1% raise. The inflation rate for that year was 2%. Did the worker's real income increase, decrease, or remain the same? Explain.
- Inflation refers to an increase in the: A. average level of nominal output. B. relative prices of some goods as compared to other goods. C. standard of living. D. average level of prices.
- An increase in [{Blank}] will shift the SRAS curve. - actual inflation, but not expected inflation - expected inflation, but not actual inflation - both actual inflation and expected inflation - neither actual inflation nor expected inflation
- According to Neoclassical macroeconomic theory, the actual unemployment rate is above the natural rate when a. unemployment is greater than inflation b. unemployment is less than inflation c. actual inflation is less than expected inflation d. actual infl
- Deflation occurs when: a. the inflation rate is negative. b. the purchasing power of money decreases substantially. c. the inflation rate continues to be positive but slows down. d. the value of the CPI increases.
- If prices are expected to rise more slowly in the future: A. the Phillips curve will shift to the right. B. the actual rate of inflation will increase. C. the actual inflation rate will remain steady unless supply shocks set in. D. the government will car
- A) Why would you expect the inflation rate to accelerate if the actual unemployment rate declined to a level lower than the "full employment" unemployment rate (NAIRU) and remained at that low level f
- Suppose you are currently earning exist15 an hour. If the inflation rate over the current year is 10 percent and your firm provides a cost-of-living raise based on the rate of inflation, what would y
- Inflation occurs: a. when the prices of some goods rise and prices of some goods fall, but fewer goods have price increases than decreases. b. when the overall level of prices rises. c. when all prices in the economy fall. d. when the prices of some goods
- Why are economists concerned about inflation? A. Inflation generally causes unemployment rates to rise B. Inflation lowers the standard of living for people whose income does not increase as fast as the price level C. Inflation increases the value of peop
- The trade off between inflation and unemployment does not exist in the long run because people will adjust their expectations so that expected inflation: a. Exceeds in the inflation rate b. Equals the inflation rate c. Is below the inflation rate d. Equal
- Keynes believed that a) perceived that decline in real wages caused price level increases would be resisted by labor, whereas an equivalent fall in the real wage from a money cut would be accepted b
- If productivity increases by 5% while wages increase by 2%, then it is most likely that: A. the price level will fall by 3%. B. the price level will rise by 3%. C. the price level will fall by 7%. D. the price level will rise by 7%.
- If, over time, wages and salaries on an average rise at least as fast as inflation, why do people worry about how inflation affects incomes?
- Inflation is: a. an increase in the general price level. b. not a concern during war. c. a result of high unemployment. d. an increase in the relative price level.
- How much inflation will the proposed July 2013 minimum wage hikes cause and if that inflation is squashed as it should be by the Fed, how much would economic growth be reduced?
- Using the AD-Solow growth curve model, the internet revolution of the 1990s caused: a) both real growth and inflation to increase. b) real growth to increase and inflation to decrease. c) both real growth and inflation to decrease. d) real growth to d
- Why are economists concerned about inflation? (i) Inflation generally causes unemployment rates to rise. (ii) Real GDP is necessarily falling when there is inflation. (iii) Inflation lowers the standard of living for people whose income does not inc
- When the actual rate of inflation is less than the expected rate: a. firms will increase their output to recoup their falling profits. b. firms will experience rising profits and thus increase their employment. c. the unemployment rate will temporarily fa
- Which of the following is NOT an argument for maintaining a positive rate of inflation? a. It permits real interest rates to be negative. b. It allows real wages to fall without cuts in nominal wages. c. It increases the variability of relative prices.
- Which of the following is not an argument for maintaining a positive rate of inflation? i. It permits real interest rates to be negative. ii. It allows real wages to fall without cuts in nominal wages. iii. It increases the variability of relative prices.
- Stagflation occurs when: A. inflation falls and unemployment rises. B. inflation rises and unemployment falls. C. inflation and unemployment both rise. D. Inflation and output both rise. E. Inflation and output both fall.
- Nominal monthly wages increase from $1,500 to $1,800 while the price of a car increases by 4%. The percentage change in real monthly wages (in terms of cars) is about: a. 10% b. 12% c. 14% d. 16%
Explore our homework questions and answers library
Browse
by subject