Suppose the price level increases by 5 percent and the nominal wages of workers increase by 3 percent during a particular year.This implies that the real wage has:

A) declined by 2 percent.
B) declined by 8 percent.
C) also increased by 2 percent.
D) also increased by 8 percent.
E) remained constant.

Nominal Wages

The amount of money paid to employees before adjusting for inflation, representing the face value of earnings.

Real Wage

The purchasing power of wages, taking into account the impact of inflation on buying capabilities.

Price Level

refers to the average of current prices across the entire spectrum of goods and services produced in the economy.