Deborah's paycheck each week is $10 per hour times the number of hours she works. deborah thus currently earns a /real) wage of $10 per hour. suppose the price of orange juice is $2.50 per gallon. the amount of orange juice she can buy with her paycheck is ,4gallon,2gallon,3gallon) of orange juice, which represents /nominal) wage. when workers and firms negotiate compensation packages, they have expectations about the price level (and changes in the price level) and agree on a /real) wage with those expectations in mind. if the price level turns out to be higher than expected, a worker'/real) wage is /lower) than both the worker and employer expected when they agreed to the wage. suppose that deborah and her employer both expected inflation to be 4% between 2010 and 2011. they signed a two-year contract stipulating that deborah would earn $10 per hour in 2010 and $10.40 per hour in 2011. however, actual inflation between 2010 and 2011 turned out to be 5% rather than the expected 4%. for example, suppose the price of orange juice rose from $2.50 per gallon to $2.62 per gallon. this means that between 2010 and 2011, deborah's nominal wage /decreased) by %/-1%/,4%) , and her real /decreased) by approximately %/-1%/9%) .