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How can we define the real wage as nominal wage
We define real wage as nominal wage divided by a price index (typically CPI). In the illustration above, your real wage was 20 in January and 21.36 in February if we use price of the basket as a price index. Remember that nominal wage will tell you your wage in units of currency whereas real wage will tell you your wage in baskets of goods and services and this is more important to us.
Hence we care about increases in real wages, not in nominal wages. If you found out that Ken, who works in another nation, got a 50% increase in his wage every year, you may 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 the year before - a real wage cut by 12%.
Under what conditions does the text explain that monetary policy is neutral? If it is neutral under these conditions, why is it still an important economic policy tool? Your answer
If the firm‘s lowest average cost is $52 and the corresponding average variable cost is $26, what does it pay a perfectly competitive firm to do if • The market price is $51?
Question 1: Consider a two-period, two-person pure exchange economy. Utility functions and endowments are given as follows. u1(x0; x1) = (x0x1)2 and e1 = (18; 4) u2(x0; x1) = ln x0
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benefit of GDP
#question.WHAT IS GDP AND DIFFERENT PRICE LEVEL IN SHORT RUN?.
What is money and what is not money If you are trying to conclude if something is money, simply consider whether it would be accepted in most stores as payment. You then realiz
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