Assume that a person's wages are perfectly indexed and the economy experiences deflation. Which of the following statements is correct? Nominal wages would decrease, and real wages would increase. Nominal wages would decrease, and real wages would decrease. Nominal wages would decrease, and real wages would remain the same. Nominal wages would increase, and real wages would increase. Nominal wages would increase, and real wages would decrease.
Assume that a person's wages are perfectly indexed and the economy experiences deflation. Which of the following statements is correct? Nominal wages would decrease, and real wages would increase. Nominal wages would decrease, and real wages would decrease. Nominal wages would decrease, and real wages would remain the same. Nominal wages would increase, and real wages would increase. Nominal wages would increase, and real wages would decrease.
Chapter7: Inflation
Section: Chapter Questions
Problem 19SQ
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
Transcribed Image Text:Assume that a person's wages are perfectly indexed and the economy experiences deflation.
Which of the following statements is correct?
Nominal wages would decrease, and real wages would increase.
Nominal wages would decrease, and real wages would decrease.
Nominal wages would decrease, and real wages would remain the same.
Nominal wages would increase, and real wages would increase.
Nominal wages would increase, and real wages would decrease.
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