If the nominal wage is $40 and the price level (as measured by a price index) is 2.5, it follows that the real wage is:_____.
a. $100.00.b. $16.00.c. $2.50.d. $10.00.e. none of the above.

The real wage, also known as the adjusted wages, is the amount of income that a person may anticipate to get after adjusting for the current inflation rate. For instance, if the person's nominal income is $14.00, then their real wage may be higher or lower based on the current rate of the inflation.

Real wages are established by the inflation rate and take into account the buying power of the compensation amount. Nominal salaries are not adjusted for inflation and are purely determined by existing government rules.

The formula to compute the real wage is :

Real wage= (Nominal wage/ Price level)

=($40/2.5)

=$16

Therefore, the real wage rate is b. $16.

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If the nominal wage is $40 and the price level (as measured by a price index) is 2.5, it follows that the real wage is:_____. a. $100.00.b. $16.00.c. $2.50.d. $10.00.e. none of the above.

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If the nominal wage is $40 and the price level (as measured by a price index) is 2.5, it follows that the real wage is:_____.
a. $100.00.b. $16.00.c. $2.50.d. $10.00.e. none of the above.