Asked by Amanda Herrera on Jun 22, 2024
Verified
If Justine's money wages tripled from 2015 to 2020 and the consumer price index tripled,we would know that Justine's real wages
A) fell substantially.
B) fell slightly.
C) stayed the same.
D) rose slightly.
E) rose substantially.
Real Wages
Nominal wages corrected for inflation.
Money Wages
The current dollar amount of a person’s wages.
Consumer Price Index
The most important measure of inflation. This tells us the percentage rise in the price level since the base year, which is set at 100; represented by CPI.
- Understand the relationship between nominal wages, real wages, and the consumer price index.
Verified Answer
KJ
kelly JohnsonJun 25, 2024
Final Answer :
C
Explanation :
The fact that the consumer price index tripled indicates that prices have also increased by a factor of three. Therefore, Justine's money wages increasing threefold would have kept her real wages (purchasing power) at the same level as before.
Learning Objectives
- Understand the relationship between nominal wages, real wages, and the consumer price index.
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