You are offered a 11 percent wage increase and the inflation

You are offered a 11 percent wage increase and the inflation rate for the year turns out to be 11 percent. The change in your real wage is 0 percent. With a 0 percent change in your real wage, you are than you were before.

A. Better off

B. Worse off

C. No better off or worse off

Solution

Answer:- You are offered a 11 percent wage increase and the inflation rate for the year turns out to be 11 percent. The change in your real wage is 0 percent. With a 0 percent change in your real wage, you are than you were before.

Correct Answer:- C. No better off or worse off

Reason:- Real wage includes the rate of inflation, as the increase of inflation rate is equal to the wage increment thus there is no change in the net real wage.

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