Workers in country A receive an increase in wages of 10 percent at the same time the inflation rate in country A is 8 percent. Workers in country B receive an increase in wages of 3 percent and the inflation rate in country B is 1 percent. In which country are workers better off?
A. Country A because their real wages rise by 18 percent.
B. Country A because their real wages rise by 10 percent.
C. Country B because the inflation rate is lower.
D. Neither country because the increase in real wages is the same.
Answer: D
You might also like to view...
As a result of low interest rates on CDs and the perceived riskiness of alternative investments following the financial crisis of 2007-2009, the bond market was affected in all of the following ways EXCEPT:
A) higher demand for bonds B) higher real interest rates C) lower nominal interest rates D) higher price of bonds
For a time, either R. J. Reynolds or Phillip Morris raised prices of cigarettes twice a year by about 50 cents per carton. The other firms in the industry raised their prices by the same amount. Economists call this: a price war. a. predatory pricing
b. a price war. c. price leadership. d. producer sovereignty.