Asked by Apple joy!!! on Jul 27, 2024
Verified
Wages and prices are many times higher today than they were 30 years ago, yet people do not work a lot more hours or buy fewer goods. How can this be?
Wages and Prices
Refers to the levels of remuneration for labor and the cost of goods and services in an economy, respectively, which can influence each other.
- Articulate the difference between nominal and real variables and how each is affected by inflation.
Verified Answer
MN
Mahnoor NadeemAug 02, 2024
Final Answer :
Inflation has raised the general price level. An increase in the general price level has no effect on real variables in the long run. Wages are higher, but so are prices. Prices are higher, but so are wages and incomes. In the long run, people change their behavior in response to changes in real variables, not nominal ones.
Learning Objectives
- Articulate the difference between nominal and real variables and how each is affected by inflation.