What is the real average hourly wage in 2009?
a. $8.61
b. $8.21
c. $7.92
d. $17.42 what can be said about real average hourly earnings and nominal average hourly earnings between 2008 and 2010?
a. both real and nominal average hourly earnings decreased.
b. real average hourly earnings decreased and nominal average hourly earnings increased.
c. real average hourly earnings increased and nominal average hourly earnings decreased.
d. both real and nominal average hourly earnings increased?

Question

09-02-2018
Business

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What is the real average hourly wage in 2009?
a. $8.61
b. $8.21
c. $7.92
d. $17.42 what can be said about real average hourly earnings and nominal average hourly earnings between 2008 and 2010?
a. both real and nominal average hourly earnings decreased.
b. real average hourly earnings decreased and nominal average hourly earnings increased.
c. real average hourly earnings increased and nominal average hourly earnings decreased.
d. both real and nominal average hourly earnings increased?

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jamuuj jamuuj · Answer 1 · 2018-02-21T17:37:01+01:00

a) Nominal average earnings in 2008 was $16 and the CPI was 202, while the Nominal average earnings in 2009 was $17 and the CPI was 207.
Real average wage in a year is calculated by the formula;
= (nominal wage in a year/CPI in a year) × 100
Therefore; the real wage in year 2009 will be;
=(17/207) × 100
= 0.08213 ×100
= $ 8.2

b) I believe it is evident that both the real and nominal average hourly earnings increased between year 2008 and year 2010, That is
In 2008 the Nominal wage was $16 while in 2010 it was $18, while
the real wage was $7.92 in 2008 and $8.6 in 2010. The major difference between nominal hourly wage and the real hourly wage is that real wage takes inflation (purchasing power) into consideration while nominal wage does not.