Real wages – definition
Real wages are nominal wages adjusted for the effects of inflation. Changes in nominal wages can be expressed as an index, and if we divide this by changes in the price level (and multiply by 100) we can derived an index for real wages.
Hence the index of nominal wage changes is 100 in 2018 (the base year) and rises to 110 in 2019 given that nominal wages increase by 10%
If we divide the nominal wage index by the inflation index and multiply by 100, we can derive the real wage index.
Which equals 107.8. Hence real wages increased by 7.8% in 2019.
Does Public Choice Theory Affect Economic Output? Both on paper and in real life, there is a solid relationship between economics, public choice, and politics. The economy is one of the major political arenas after all. ...
Consumer Confidence Compared to Q2 Job Growth Since WWII, nothing has caught global attention and heightened economic fears quite like Covid-19. Many economies are at the brink of collapse, as companies struggle to stay afloat. World governments ...
Arbitrage Price Theory vs. Capital Asset Pricing Risk is inevitable for all types of assets, but the risk level for assets can vary. It all depends on the specific investment itself. Fortunately, even though no one can ...
Federal Interest Rate Projections for 2021 The U.S. Federal Reserve isn’t sugar-coating its assessment of the world’s biggest economy. During its last meeting post-pandemic, it cut its growth projections for 2020 while vowing to help propel the ...
Covid-19 Chapter 11 Retail Bankruptcies and Restructures You can't deny it, COVID-19 as turned the U.S. economy upside down. Most businesses have never been financially worse off, and many have had to file for bankruptcy ...
How Producer Price Index Affects Other Inflation Measures Inflation is the measure at which prices of goods and services rise and fall. It is among the most accurate measures of the general condition of an economy. When the ...