If the price level rises by 4 percent in a year and nominal wages increase by 2 percent, then real wages will

A) decrease by 6 percent.
B) decrease by 4 percent.
C) decrease by 2 percent.
D) increase by 2 percent.

Price Level

An indication of the average prices of goods and services in an economy at a specific time, often used to measure inflation.

Nominal Wages

The amount of money paid to an employee before adjustments for factors like inflation, not reflecting the real purchasing power of the income.

Real Wages

Wages adjusted for inflation, representing the actual purchasing power of income received by workers.