question archive The real wage is equal to the: a
Subject:EconomicsPrice:2.88 Bought3
The real wage is equal to the:
a. wage measured in terms of the dollar value of the goods and services it buys,
b. nominal wage net of taxes paid on wages.
c. wage measured in terms of the quantity of goods and services it buys.
d. non-wage benefits received by workers.
The answer is: c. wage measured in terms of the quantity of goods and services it buys. Real wages are in terms of the quantity purchased, not the dollar value. If it was in terms of the dollar value, the dollar value may be inflated as well. By using a basket of goods and services, you compare buying power as opposed to price level, which provides more relevant information.