Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Q. Define the Real wage?
Consider the following scenario. You work full time and during January 2008 you make 2000 euro after tax. A certain basket of goods and services costs 100 euro in January that means that your salary will buy you 20 such baskets.
In February, you receive a 10% wage increase and you make 2200 euro after tax. Does this imply that you can purchase 10% more baskets - which is 22 - in February? Well, not essentially.
Number of baskets that you can purchase in February depends on the possible changes in prices as well. If price of a basket increases by 3% to 103 euro your 2200 will buy you 2200/103 = 21.36 baskets of 7% more than in January. Albeit your wage has increased by 10%, you can only increase your consumption of baskets by 7%. We say that real wage has increased by 7%.
Officially, we define real wage as the nominal wage divided by a price index (characteristically CPI). In the instance above, your real wage was 20 in January and 21.36 in February if we use the price of basket as a price index. Remember that nominal wage will tell you your wage in units of currency whereas the real wage will tell you your wage in baskets of services and goods and this is more significant to us.
So we care about increases in real wages not in the nominal wages. If you found out that Ken who works in another country, got a 50% increase in his wage every year, you can initially be quite happy for Ken. If you then found out that inflation in country where Ken works is 70%, you should actually feel sorry for him. His real wage is 1.5/1.7 = 88% of his real wage year before - a real wage cut by 12%.
Monetary Policy Vs. Fiscal Policy According to monetarists, money is very important in determining the level of aggregate demand and that monetary policy is very potent. In con
What is the difference between 'quantity supplied' and 'supply'? There is a distinction among supply and quantity supplied. Supply explains the behavior of sellers at every pr
THE GOALS OF MACROECONOMIC POLICY Economic analysis attempts to explain why problems arise in the economy and how these problems can be dealt with. It is, therefore, indispens
State the term- - GDP is a flow Lastly, note that GDP is a flow variable and not a stock variable. By a flow variable we mean a variable which is measured in something per uni
A restaurant/bar is analyzing its pricing of beer. It has determined that the price elasticity of demand for beer is 0.8, the cross-price elasticity for wine with respect to the pr
The market for quits is initially competitive and the market demand is: P=400-0.4QD. The Combined marginal costs of the firms in the quit industry are: MC=50+0.6Q. a. Draw the
Review the most current results of FORTUNE Magazine's annual ranking of America's "100 Best Companies to Work For." Explore the website of at least three of the companies noted. De
Foreign Institutional Investment: Foreign investment flows in the balance of payments (BOP) comprise FDI flows and portfolio flows. The latter consists of resources mobilis
Explain whether, the following statements are TRUE, FALSE or UNCERTAIN. Briefly justify your answer. (i) The circular flow shows how real resources and financial payments flow
The Widget Manufacturing Company must replace a widget machine, and is evaluating the capabilities of two systems. A requirement of management is that the machine chosen must be p
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd