Explanation:
The computations are shown below:
a. The percentage change in nominal wages increase is
= ($23 - $14) ÷ ($14)
= ($9) ÷ ($14)
= 64%
b. The percentage change in consumer price increase is
= (254 - 170) ÷ (170)
= (84) ÷ (170)
= 49.41%
c. Now the real wages increase would be
For increase in real wages, first we have to find out the real wages i.e shown below:
= ($14 × 254) ÷ (170)
= $20.92
And, the current hourly wage rate is $23
So, the difference is
= $23 - $20.92
= $2.08
Now the increase in wage rate is
= ($2.08 ÷ $14) × 100
= 14.85%
