Holding all else equal, real wages _____ when inflation rises.
A)decrease
B)increase
C)stay constant
D)change at the same rate as inflation

Question

Quizplus · Accepted Answer

Real wages refer to wages adjusted for inflation. If inflation rises, the prices of goods and services increase, but the purchasing power of workers' wages remains the same. This means that workers can afford to purchase fewer goods and services with their wages, resulting in a decrease in real wages.

Holding All Else Equal, Real Wages _____ When Inflation Rises