The price of a candy bar is $1.13 in Year 1 and $1.18 in Year 2. The nominal wage rate is $8 in year 1 and $9 in year 2. What is

Question

2 years ago

14

the approximate percentage change in the real wage rate from year 1 to year 2

1 answer:

victus00 [196] · Answer 1 · 2023-01-21T05:08:11+03:00

The approximate %change in the real wage rate from year 1 to year 2 is 8%.

The Real wage refer to an amount of compensation that a worker can can expect to get after factoring inflation rate

CPI in Year 1 = 1.13 * 100

CPI in Year 1 = 113

CPI in Year 2 = 1.18 * 100

CPI in Year 1 = 118

Real wage = Old wage * CPI in Year 2/CPI in Year 1

Real wage = 8 * (118/113)

Real wage = 8.3539

Real wage = 8%

In conclusion, the approximate %change in the real wage rate from year 1 to year 2 is 8%.