Suppose you received a 5 percent increase in your nominal wage. Over the year, inflation ran about 2 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 your nominal and real wages increased.

Question

Quizplus · Accepted Answer

Your nominal wage increased by 5 percent, and with inflation at 2 percent, your real wage (adjusted for inflation) also increased by 3 percent.

Suppose You Received a 5 Percent Increase in Your Nominal