Asked by Marcos Urbina on May 26, 2024
Verified
If Bart's money wages doubled from 2013 to 2018 and the consumer price index rose by 50%,we would know that Bart's real wages
A) fell by 50%.
B) stayed about the same.
C) rose by less than 50%.
D) doubleD.
Real Wages
Wages that have been adjusted for inflation, representing the purchasing power of income earned from labor.
Money Wages
The nominal wages received by employees, measured in units of currency rather than purchasing power.
Consumer Price Index
The Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
- Familiarize oneself with the association between nominal wages, real wages, and the consumer price index.
Verified Answer
EF
Erick FigueroaMay 26, 2024
Final Answer :
C
Explanation :
A rise in money wages does not necessarily indicate a rise in real wages. Real wages take inflation into account, which is represented by the consumer price index (CPI). Since the CPI rose by 50%, it means that prices increased by 50%. Therefore, if Bart's money wages doubled, the increase in real wages would be less than 100%, but more than 50%. This means real wages would have risen by less than 50%.
Learning Objectives
- Familiarize oneself with the association between nominal wages, real wages, and the consumer price index.