Explain the real wage with example, Macroeconomics

Assignment Help:

Explain the Real wage with example

Consider following scenario. You work full time and during January 2008 you make 2000 euro after tax. A specific basket of services and goods costs 100 euro in January that means that your salary would buy you 20 such baskets.

In February, you receive a 10% wage increase and you have 2200 euro after tax. Does this imply that you can buy 10% more baskets - which is 22 - in February? Well, not essentially.

The number of baskets which you can buy in February relies 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%.

 


Related Discussions:- Explain the real wage with example

frame work, Hello sir, madam... I am hassan PHD student. I''m lost to get...

Hello sir, madam... I am hassan PHD student. I''m lost to get a good frame work of my thesis about e government and economic growth. and I need to know how to measure the variable

Detetrmine gross investment and government expenditure, The following is th...

The following is the information from the national income accounts for a hypothetical country:  GNP                                                                  Rs. 5000.00

Why does an indifference curve never meet, No indifference curve can inters...

No indifference curve can intersect due to all points on indifference curve are ranked equally preferred and ranked or less more preferred than each other point on the curve.

Increase demand for diamonds and in supply of diamonds, Suppose there is a ...

Suppose there is a simultaneous increase in the demand for diamonds and increase in the supply of diamonds. Which of the following will occur as a result of these simultaneous even

Major tenets of kant''s ethical theory, Please answer the question below re...

Please answer the question below relating it to BUSINESS in today's world. What are the major tenents of the ethical theory of Utilitarianism, and how would this theory be appli

Describe the classical model of macroeconomics, Q. Describe the classical m...

Q. Describe the classical model of macroeconomics? 'The classical model' was a term coined by Keynes in the 1930s to signify essentially all the ideas of economics as they appl

What is labor market, Q. What is Labor Market? Labor market in the IS-L...

Q. What is Labor Market? Labor market in the IS-LM model is the same as in cross model. Hence the IS-LM model is only applicable if profit-maximizing quantity of L would result

External Economies of Scale, Why might external economies of scale be of in...

Why might external economies of scale be of interest to developing countries?

Inflation, Hello, how to cure inflation, particularly addressing rising foo...

Hello, how to cure inflation, particularly addressing rising food prices thanks Gedanken

Advantages of leaving resource allocation, What are the advantages of leavi...

What are the advantages of leaving resource allocation to price allocation? Ans) The 5 benefits are Neutral, Flexible, Freedom of choice, No administrative cost and lastly Dimin

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd