Deflation occurred and the aggregate price level fell

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Reference no: EM13851998

General Electric paid its line workers $10 per hour last year when the Consumer Price Index was 100. Suppose over the past year that deflation occurred and the aggregate price level fell to 80.

Instructions: Round your answers to two decimal places.

a. GE must pay its workers $ this year in order to keep the real wage fixed at $10.

b. GE must pay its workers $ this year if it wants to increase the real wage by 10 percent.

c. If GE keeps the wage fixed at $10 per hour, in real terms, its workers get a % increase in real wages

Reference no: EM13851998

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