In this example, we return to the question raised in the chapter opener. According to government statistics, the median household income in the United States in 1953 was $3,700 per year. Based on the CPI, this is equivalent to $30,000 in 2008. We can now answer the following questions.(a) What was the annual compound rate of growth in median household income from 1953 to 2008? (b) By 1978, median household income was actually $15,000. Based on your answer in Part (a), what is the equivalent household income in 2008? (c) Was the actual median household income in 1978 higher than what you would have predicted in Part (a)? If so, give some reasons for this phenomenon.
In this example, we return to the question raised in the chapter opener. According to government statistics, the median household income in the United States in 1953 was $3,700 per year. Based on the
(a) What was the annual compound rate of growth in median household income from 1953 to 2008? (b) By 1978, median household income was actually $15,000. Based on your answer in Part (a), what is the equivalent household income in 2008? (c) Was the actual median household income in 1978 higher than what you would have predicted in Part (a)? If so, give some reasons for this phenomenon.
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