Answer to Question #105422 in Microeconomics for Nhlaphu Mulaudzi

Question #105422

Question 1

1-Explain what happens to real wages if the inflation rate is 7% and money wages increase by 5%.

Expert's answer

If the inflation rate is 7% and money wages increase by 5%, then the real wages will increase by 5 - 7 = -2% or decrease by 2%.

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