Workers in country A receive an increase in wages of 10 percent at the same time the inflation rate in country A is 8 percent. Workers in country B receive an increase in wages of 3 percent and the inflation rate in country B is 1 percent. In which country are workers better off?
A. Country A because their real wages rise by 18 percent.
B. Country A because their real wages rise by 10 percent.
C. Country B because the inflation rate is lower.
D. Neither country because the increase in real wages is the same.
Answer: D
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