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This question is related with real and nominal principle, and taken from your textbook (Table 2.2. page 41). Interpret the ta

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Answer #1

Understanding from the table:

1. Minimum wage has increased by (5.85 - 2), i.e 192.5% over a period of 33 years.

2. Cost of standard basket of goods has increased by (202 - 47) i.e, 329.8% over a period of same 33 years.

Therefore it can be said that minimum wage has not increased in line with the inflation in the coy=untry, thus it has lead to decrease in purchasing power over a period of time.

This is also evident from the fact that in 1974 a person can buy 1.7 number of basket of goods while same person can only buy 1.16 number of basket of goods in 2007.

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