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Determine the term- Nominal wages
The nominal wage is wage per unit of time in currency used in the country- what we mainly just call wage. When we refer to wage in macroeconomics we almost always mean gross wage, that is, wage before income taxes however after employment taxes paid by employer. Wage is a flow which we typically measure in units of currency per hour.
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How can we define the real wage as nominal wage We define real wage as nominal wage divided by a price index (typically CPI). In the illustration above, your real wage was 20 i
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