The nominal price (per pound) of apples for each year is shown in the timeline below....

The nominal price (per pound) of apples for each year is shown in the timeline below.

What is the real price of apples in year 2002 (as seen from year 2001).

Calculate your answer to the nearest penny (e.g., 3.81)

Year	2001	2002	2003	2004
Nominal Price	$2.5	$2.54	$2.7	$2.8
Price Level	151	155	157	158
Price Adjustment
Real Price

Solutions

Expert Solution

Price adjustment Real Price = Current Price * Base Year Price Level / Current Year Price level

Year	Nominal Price	Base Price Level	CY Price Level	Price Adj Real Price	Calculation
2001	$ 2.50	151	151	$ 2.50	= 2.5 * 151 / 151
2002	$ 2.54	151	155	$ 2.47	= 2.54 * 151 / 155
2003	$ 2.70	151	157	$ 2.60	= 2.7 * 151 / 157
2004	$ 2.80	151	158	$ 2.68	= 2.8 * 151 / 158

jeff jeffy answered 1 year ago

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