If the inflation rate equals zero, then a worker's real wage will fall when:
A)the nominal wage increases by less than 1% per year.
B)the nominal wage decreases.
C)the nominal wage is constant.
D)relative prices increase.

Question

Quizplus · Accepted Answer

If the nominal wage decreases while the inflation rate is zero, the real wage will fall because the purchasing power of the wage decreases.

If the Inflation Rate Equals Zero, Then a Worker's Real