Multiple Choice
If everyone buys the same goods every year and the price of housing rises by 38%:
A) it is certain the consumer price index (CPI) has increased; and if your nominal wage has risen by less than 38%, your real wage has fallen.
B) it is certain the CPI has increased; and if your nominal wage has risen by more than 38%, your real wage has risen.
C) it is possible that the CPI has increased, but it is certain your real wage has fallen.
D) it is possible that the CPI has increased.However, it is certain your real wage has risen, if and only if, your nominal wage increased by more than 19% because housing accounts for exactly 50% of the CPI.
E) it is not possible to tell what happened to the CPI because other than for housing, we do not know what happened to the prices of any of the other goods.
Correct Answer:
Verified
Correct Answer:
Verified
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