Question

Julie received a 10% wage increase while consumer prices rose by 3%. how much did julie's real wage increase in nominal and real terms? 7%*in real terms, but 10% nominally 10% nominally, but only 3% in real terms 3% in real terms, but 10% nominally 13% nominally, but 10% in real terms

Answer 1

Answer: 7%*in real terms, but 10% nominally

By real prices, we mean prices adjusted for general price level changes over time like inflation or deflation. Nominal prices are the current dollar value of a product at the time it was produced.

Julie received a 10% wage increase but since the consumer prices rose by 3%, in real terms, the increase she received is only 7%. In nominal term, it is 10%.