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Becky and her employer both expected inflation to be 4% between 2012 and 2013, so they agreed, in a two-year contract, that she would earn $12.00 per hour in 2012 and $12.48 per hour in 2013. However, suppose inflation between 2012 and 2013 actually turned out to be 5%, not 4%. For example, suppose the price of milk rose from $2.40 per gallon to $2.52 per gallon. This means that between 2012 and 2013, Becky's nominal wage by % and her real wage by approximately

Becky and her employer both expected inflation to be 4% between 2012 and 2013, so they agreed, in a two-year contract, that she would earn $12.00 per hour in 2012 and $12.48 per hour in 2013. However, suppose inflation between 2012 and 2013 actually turned out to be 5%, not 4%. For example, suppose the price of milk rose from $2.40 per gallon to $2.52 per gallon. This means that between 2012 and 2013, Becky's nominal wage by % and her real wage by approximately

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Becky and her employer both expected inflation to be 4% between 2012 and 2013, so they agreed, in a two-year contract, that she would earn $12.00 per hour in 2012 and $12.48 per hour in 2013. However, suppose inflation between 2012 and 2013 actually turned out to be 5%, not 4%. For example, suppose the price of milk rose from $2.40 per gallon to $2.52 per gallon. This means that between 2012 and 2013, Becky's nominal wage by %, and her real wage by approximately
Transcribed Image Text:Becky and her employer both expected inflation to be 4% between 2012 and 2013, so they agreed, in a two-year contract, that she would earn $12.00 per hour in 2012 and $12.48 per hour in 2013. However, suppose inflation between 2012 and 2013 actually turned out to be 5%, not 4%. For example, suppose the price of milk rose from $2.40 per gallon to $2.52 per gallon. This means that between 2012 and 2013, Becky's nominal wage by %, and her real wage by approximately
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