Suppose you are seeking a real wage increase of 2% and you expect inflation to be 3%.What nominal wage increase should you seek?
A) 2.0%
B) 3.0%
C) 1.0%
D) 5.0%
E) 1.5%

Question

Quizplus · Accepted Answer

To calculate the nominal wage increase, we add the real wage increase to the expected inflation. Therefore, nominal wage increase = real wage increase + inflation. 
In this case, nominal wage increase = 2% + 3% = 5%. Thus, the best choice is D) 5.0%.

Suppose You Are Seeking a Real Wage Increase of 2