Nominal / Real 6. Real wages, nominal wages, and unexpected changes in the pricelevel Cho's paycheck each week is $12 per hour times the number of hours she works. Cho thus currently earns a which represents her Suppose the price of orange juice is $4 per gallon. The amount of orange juice she can buy with her paycheck is wage of $12 per hour. 1 gallon wage. Nominal / Real of orange juice, 2 gallon 12 gallon When workers and firms negotiate compensation packages, they have expectations about the price level (and changes in the price level) and agree on wage with those expectations in mind. If the price level turns out to be higher than expected, a worker's 3 gallon Read than both the worker and employer expected when they agreed to the wage. wage is Nominal Real / Nominal Suppose that Cho and her employer both expected inflation to be 3% between 2012 and 2013. They signed a two-year contract stipulating that Cho would earn $12 per hour in 2012 and $12.36 per hour in 2013. However, actual inflation between 2012 and 2013 turned out to be 5% rather than the higher Cho's nominal wage expected 3%. For example, suppose the price of orange juice rose from $4 per gallon to $4.20 per gallon. This means that between 2012 and 2013, by , and her real wage by approximately OV lower decreased - 27. Increased - 2% 3 %. DV lacreased decreased 81