Many macroeconomic statistics increase over time. Examples include the price level, the nominal wage level, the...

Many macroeconomic statistics increase over time. Examples include the price level, the nominal wage level, the real wage level, and the nominal money supply level. What are normal rates of growth for these four data series?

Expert Solution

Nominal wages are the wages received by a worker in the form of money hence they are also called money wages.For example a worker gets doller 200 from his or her organisation in exchange of services rendered by him .Real wages are the amount of goods and services that a worker purchases from nominal wages hence they are the purchasing power of the nominal wages.Real wages=Nominal wages - inflation.The Fed has fixed the target to 3.5 to 4% and is defined as normal

Growth rate for nominal wages .with 2% overall inflation rate.while the rate of growth of real wages is1.3% The rate of growth of price level is called inflation in US price increased 2.2 % year on year in Feb 2018 the monthly rate of growth is 0.2% .In US money supply M2 includes M1 plus short term deposits in banks the money supply increase to 13858.30 USD billion in Feb from13838..30 USD billion in Jan 2018 with a growth rate of 0.14 %

Rahul Sunny answered 2 years ago

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