Question

Distinguish between real and money wages.

Distinguish between the ‘real wages’ and ‘money wages’ of a worker.

Answer 1

1. Real wages: Wages paid in terms of goods and services. It refers to the purchasing power of money wages.
2. Money wages: Nominal wages are referred to as wages paid in terms of money.

Answer 2

Basis	Money Wages	Real Wages
Meaning	The amount of money a worker receives as payment.	The actual goods and services a worker can buy with that money.
Depends On	Nominal payment (e.g., ₹ 10,000 per month).	Purchasing power (affected by prices, cost of living).
Influenced By	Employment contract or wage agreement.	Cost of living, inflation, and availability of goods.
Example:	A worker earning ₹ 15,000 is receiving money wages.	If prices rise and ₹ 15,000 buys fewer goods, real wages fall.