If Johns nominal wage rises slower than the price level then

If John\'s nominal wage rises slower than the price level then we can say that John\'s real wage has _____ that the purchasing power of John\'s income has ______

fallen; fallen

fallen; risen

risen; fallen

risen; risen.

Solution

When nominal wage increases at a slower rate than increase in prices then real wage has fallen because

Increase in real wage=Increase in nominal wage-increase in price

When increase in prices>increase in nominal wage then increase in real wage decreases and purchasing power also decreases.

Thus ans is A