Suppose your nominal wage fell and deflation occurred. Did your real wage increase or decrease?

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Suppose your nominal wage fell and deflation occurred. Did your real wage increase or decrease?

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Answer 1

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Answer — If nominal wage fell and deflation occurred then, as a joint effect , real wage may, increase, decrease or remain costant;

If rate of fall in the nominal wage is lower than deflation rate then the real wage will increases.
If rate of fall in the nominal wage is higher than the rate of deflation then the real wage decreases .
And if the rate of fall in the nominal wage is equal to the rate of deflation then the real wage will remain constant.

( Increase in the real wage, increase purchasing capacity, if wage fall by 2%, and prices of goods and services fall ( deflation) by 5% , then purchasing power (real wage )increase by 3%, ............)

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Answer 2

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Suppose your nominal wage fell and deflation occurred. Did your real wage increase or decrease?

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