Question

The equilibrium real wage is 4, the money supply equals 30 and k equals 4. If equilibrium output is 8, then equilibrium nominal wage is
8
0.94
7.5
3.76
uncertain

Answer 1

Firstly a small summary about Nominal Wages and Real Wages:-

NOMINAL WAGES:- It is the Amount which the worker gets by Prividing Services or in Exchange Of doing work

WHILE Real wages is that amount of money which the worker uses to purchase goods for him/her

Now In the above question

Given that :

Equlibrium Real wages = 4

Money Supply = 30

Equllibrium Output=8

Equilibrium Nominal wage=?

We know the Formula for Real wage,

W=(NW/P)*100

Where W=Real wages

NW=Nominal wages

P= price Level(It depends upon Supply money)

So, NW= 1.2

As the output is 8 and N.W is 1.2 then the Equillibrium Nominal wages will Be UNCERTAIN