# The following table shows a person's nominal and real wages for three years, as well as the price level (price index) for eachyear, using the first year as the base year. Fill in the blanks in the table. Then calculate the annual inflation rate for each year(not including the base year).Instructions: Round your answers to 2 decimal places.Nominal Wage (\$)Real Wage (\$)Inflation Rate (%)YearPrice Level17.001405.002.9.007.00150.00311160.007.50

Question
111 views help_outlineImage TranscriptioncloseThe following table shows a person's nominal and real wages for three years, as well as the price level (price index) for each year, using the first year as the base year. Fill in the blanks in the table. Then calculate the annual inflation rate for each year (not including the base year). Instructions: Round your answers to 2 decimal places. Nominal Wage (\$) Real Wage (\$) Inflation Rate (%) Year Price Level 1 7.00 140 5.00 2. 9.00 7.00 150.00 3 11 160.00 7.50 fullscreen
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Step 1

The nominal wage is the monetary wage that the employ or the worker receives from their work. The nominal wage is the monetary wage and thus, it is irrespective of the price level of goods and services in the economy. On the other hand, the real wage is the quantity of goods and services that the worker can receive from the economy and it is obtained by dividing the money wage with the general price level.

Step 2

The price level in the economy can be calculated by dividing the nominal wage rate with the real wage rate and then multiplying the answer with hundred. The nominal wage rate is equal to \$7 and the real wage rate is equal to \$5. Thus, the price level in year 1 can be calculated as follows: help_outlineImage TranscriptioncloseNominal wage Real wage Price level year 1 -x 100 7 -x100 5 =1.4x100 -140 fullscreen
Step 3

The real wage rate can be calculated by simple dividing the nominal wage rate with the price level in decimal form. This means that the nominal wage rate will...

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