Suppose you received a 3 percent increase in your nominal wage. Over the year, inflation ran about 6 percent. Which of the following is true?
A) Your real wage fell.
B) Your nominal wage fell.
C) Both your nominal and real wages decreased.
D) Although your nominal wage fell, your real wage increased.
E) Both nominal and real wages increased.

Question

Quizplus · Accepted Answer

Even though your nominal wage increased, the inflation reduced the purchasing power of your wage. This means your real wage, which is your wage adjusted for inflation, decreased.

Suppose You Received a 3 Percent Increase in Your Nominal