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If the Inflation Rate Is 2 Percent and Nominal Wages

Question 19

Multiple Choice

If the inflation rate is 2 percent and nominal wages increase by 1 percent,what happens to real wages?

A) They rise by 1 percent.
B) They fall by 1 percent.
C) They remain constant.
D) They fall by 2 percent.
E) They rise by 3 percent.

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