Workers will more readily accept a real wage cut that arises from an increase in

Question

Workers will more readily accept a real wage cut that arises from an increase in the CPI than a cut in their nominal wage rate. An increase in consumer prices the real wage rate, everything else remaining the same. A. lowers B. raises C. sometimes lowers and sometimes raises D. lowers both the nominal wage rate and E. does not change People are more likely to accept a real wage cut that arises from an increase in the CPI than a cut in their nominal wage rate because. A. inflation decreases the real wage rate gradually and a cut in the nominal wage decreases the real wage rate suddenly B. a cut in the real wage rate decreases the quantify of goods and services a worker can buy by a smaller amount than a similar cut in the nominal wage rate C. a cut in the nominal wage rate decreases savings more than a cut in the real wage rate D. a cut in the real wage rate does not change the quantity of goods and services a worker can buy but a cut in the nominal wage rate does E. workers will quit before they will accept a cut in their nominal wage rate

Explanation / Answer

option A is correct. where real consumer products/services prices increases but their payments will remain the same. so, they need to be spend proportionately more amount on goods and services. so, their real wages becomes lower than earlier levels.

option B is correct.

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