Question

In: Economics

In 1997 the US CPI was 160 and in 2019 it was 256. The CPI has...

In 1997 the US CPI was 160 and in 2019 it was 256. The CPI has base year of 1982. Use this information for the following three questions.

27. The average annual percent rate of inflation from 1997 to 2019 was closest to

A. 1.2

B. 2.1

C. 3.1

D. 4.2

28. In 2019, the nominal minimum wage is $11. The real minimum wage increased over this period about how many percent per year?

A. 0.01

B. 0.1

C. 1.5

D. 2.1

EDIT: The nominal minimum wage in 1997 was $5 per hour.

Expert Solution

Question 1

CPI in 2019 = 256

CPI in 1997 = 160

Time period = 22 years

Calculate the average annual percent rate of inflation -

Average = 0.021 or 2.1%

Thus,

The average annual percent rate of inflation from 1997 to 2019 was closest to 2.1%

Hence, the correct answer is the option (B).

Question 28

Year - 2019

Nominal wage = $11

Calculate the real wage -

Real wage = Nominal wage * [CPI in 2019/CPI in 1982]

Real wage = $11 * [100/256] = $4.29

The real wage in 2019 was $4.29

Year - 1997

Nominal wage = $5

Calculate the real wage -

Real wage = Nominal wage * [CPI in 1997/CPI in 1982]

Real wage = $5 * [100/160] = $3.12

The real wage in 1997 was $3.12

Calculate the annual percentage increase in real wage between 1997 and 2019 -

Annual percentage increase = 0.0145 or 1.5%

Thus,

The annual percentage increase in real wage between 1997 and 2019 was 1.5%

Hence, the correct answer is the option (c).

Rahul Sunny answered 2 years ago

Michael Jordan Earned $30,100,000 playing for the Chicago Bulls in 1997. In 1997 the CPI was...

Michael Jordan Earned $30,100,000 playing for the Chicago Bulls in 1997. In 1997 the CPI was equal to 1.60. In 2020 LeBron James earned $37,400,000 playing for the Los Angeles Lakers. The CPI in 2020 is equal to 2.58. Calculate the real wage for Micheal Jordan in 1997 and Lebron James in 2020. Please enter your answers as numeric answers rounded to the nearest dollar with no decimals (ie. 15,553,342 or $10,432,675 not $15,553,341.73 or $10,432,675.2). Because these will be...

(x) Suppose that the CPI was 200 in 2006 and was 160 in 1996. Then according to the CPI, $100 in 2006 purchased the same amount of goods and services as $80 in 1996.

2. Which of the following statements is (are) correct?(x) Suppose that the CPI was 200 in 2006 and was 160 in 1996. Then according to the CPI, $100 in 2006 purchased the same amount of goods and services as $80 in 1996.(y) A worker received $5 for a daily wage in 1930. If the CPI was 17.4 in 1930 and is 215.6 today then the value of that 1930 wage in today’s dollars is more than $68.25 but less than...

In 1997, XYZ Company purchased several acres of land for $1,000,000. In 2019, the Federal Highway...

In 1997, XYZ Company purchased several acres of land for $1,000,000. In 2019, the Federal Highway Administration announced that it planned to build an interstate highway, with exit and entrance ramps to be located within a few miles of this property. Based on this information, the appraised value of the property on December 31, 2019, was $25 million. At what value should XYZ Company report this land in its December 31, 2019, balance sheet? Why? Which value is more relevant?...

Name a US government agency that publishes data of CPI and unemployment and provide a URL...

Name a US government agency that publishes data of CPI and unemployment and provide a URL link for each of the two variables that leads you to the data. Calculate the inflation rate between year a) 1999 and 2000, b) 2000 and 2001 given the following CPI: CPI (1999)= 89, CPI (2000)=100, CPI (2001)=107 Suppose the nominal output of year 1999 was $3200 and the real output of year 1999 was $3600, calculate the GDP deflator of year 1999. Suppose...

The CPI is 110 on January 1, 2018, and 114 on January 1, 2019. John’s nominal...

The CPI is 110 on January 1, 2018, and 114 on January 1, 2019. John’s nominal wage is $1,000 per month on January 1, 2018, and $1,100 per month on January 1, 2019. What is John's real wage on January 1, 2018? Use the CPI to calculate the inflation rate in 2018. What is the percentage increase in John's nominal wage from 2018 to 2019? Using the arithmetic trick, what is the approximate percentage change in John’s real wage? According...

In music, middle C has a frequency of about 256 Hz - the precise frequency depends...

In music, middle C has a frequency of about 256 Hz - the precise frequency depends on the tuning scheme. How does the wavelength of a middle C note propagating through air compare to the size of a typical human body? How does the wavelength of the same note propagating through water compare to the human body? What frequency of sound in air has a wavelength nearly the size of a human head? This size is important because we have...

We have decelerating inflation of 1.2% based on CPI index in Q2 2019-20 with declining growth...

We have decelerating inflation of 1.2% based on CPI index in Q2 2019-20 with declining growth in consumption, investment and net exports compared to Q2 2018-19. The growth rates of components of AD curve have shown sustained decline in the last few quarters. The natural rate of unemployment has risen from 5.1% to 10.2% from Q2 2018-19 to Q2 2019-20. The capacity utilization of core 8 industries has decreased from 96% to 76% from Q2 2018-19 to Q2 2019-20. i)...

The US can make 60 units of wheat or 120 cars. Canada can make 160 units...

The US can make 60 units of wheat or 120 cars. Canada can make 160 units of wheat or 80 cars. What are the opportunity costs in each nation? Which nation has a comparative advantage in cars? In wheat? Imagine the two nations are not trading with easy other. The US produces and consumes 40 cars and 40 wheat. Canada produce and consumes 40 cars and 80 wheat. What is the total production of cars and wheat? Now suppose each...

A monopolistic firm has costs C = 160 + 16Q + .1Q2 and has the price...

A monopolistic firm has costs C = 160 + 16Q + .1Q2 and has the price equation P = 48 - .4Q . Find the firm's profit-maximizing price. Find the firm's profit-maximizing quantity. What is the firm's profit? What is the firm's efficient scale of output? Why doesn't the firm produce at its efficient levels?

On 3 May 2019, a speculator buys five July 2019 US Soybeans futures contracts at a...

On 3 May 2019, a speculator buys five July 2019 US Soybeans futures contracts at a price of 842 cents per bushel. The speculator closes out her futures position on 30 May 2019 at a price of 888.88 cent per bushel. The US Soybeans futures contract is written on 5,000 bushels of soybeans and, for a speculator, the initial and maintenance margins are $3,375 and $2,500 per contract respectively. Assume that the speculator does not withdraw any excess out of...