In 2014, the San Francisco–Oakland–San Jose CPI was 251.985, while the Los Angeles–Riverside–Orange County CPI was 243.434. From this information, can we assert that 2014 prices were higher in San Francisco–Oakland–San Jose than in Los Angeles–Riverside–Orange County? Explain. Suppose a San Francisco resident and a Los Angeles resident each make the same nominal wage every year from 2007 to 2014: $60,000.00 a year. Using the table above, determine the percentage change in real wage in each city from 2007 to 2014 (Hint: Start by determining how much the $60,000 in 2007 dollars would be worth in 2014 dollars, then compare it to what was actually earned in 2014).
Hey! Need help with this question which divides into two subquestions:
-
In 2014, the San Francisco–Oakland–San Jose CPI was 251.985, while the Los Angeles–Riverside–Orange County CPI was 243.434. From this information, can we assert that 2014 prices were higher in San Francisco–Oakland–San Jose than in Los Angeles–Riverside–Orange County? Explain.
-
Suppose a San Francisco resident and a Los Angeles resident each make the same nominal wage every year from 2007 to 2014: $60,000.00 a year. Using the table above, determine the percentage change in real wage in each city from 2007 to 2014 (Hint: Start by determining how much the $60,000 in 2007 dollars would be worth in 2014 dollars, then compare it to what was actually earned in 2014).
Thank you in advance!
An increase in Consumer Price Index (CPI) is an indicator of inflation while a decrease in Consumer Price Index (CPI) is an indicator of deflation
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
