If actual inflation is less than expected inflation
A) the actual real wage is greater than the expected real wage.
B) the unemployment rate falls.
C) the actual real wage equals the expected real wage.
D) firms will hire more workers than they planned.

Question

Quizplus · Accepted Answer

Actual real wage is calculated by subtracting actual inflation from nominal wage. If actual inflation is less than expected inflation, then the actual real wage will be greater than the expected real wage, as the nominal wage remains the same.

If Actual Inflation Is Less Than Expected Inflation