Q2 · Practice questionSimple familiar1 mark
QUESTION 2
A worker receives a 4% increase in nominal wages while consumer prices rise by 6%. Their purchasing power
(A)
rises by 2%.
(B)
falls by approximately 1.89%.
(C)
falls by 6%.
(D)
rises by approximately 1.89%.
WORKED SOLUTION
1 markAnswer B
Answer
B
Working
The real-wage index changes by (1.04/1.06 − 1) × 100 = −1.8868%. Nominal wage growth does not keep pace with prices.
Marking criteria
- Select B. [1 mark]
Practice question aligned to the current QCAA syllabus; review the worked solution and marking criteria.
View the QCAA syllabus