The table below shows the annual change in the average nominal wage and inflation rate since 2008.a. Compute the percentage change in real income for each year shown in the table.**Instructions:** In part a, round your answers to two decimal places. In parts b and c, enter your answers as a whole number. If entering a negative number, include a minus sign.### Percentage Changes in Nominal Income and Prices| Year | Annual Inflation Rate (percent) | Annual Nominal Wage Growth (percent) | Annual Real Wage Growth (percent) ||------|----------------------------------|---------------------------------------|------------------------------------|| 2008 | 3.92% | 0.34% | (0.39) % || 2009 | -0.36% | -1.24% | (0.88) % || 2010 | 1.66% | -0.76% | 2.42 % || 2011 | 3.24% | 1.4% | || 2012 | 2.11% | 2.76% | || 2013 | 1.48% | 2.28% | 9.87 % |b. Of the years listed above, the paycheck of the average worker declined in **2** of the six years.c. Of the years listed above, the purchasing power of the average worker declined in **4** of the six years.d. The average real income of households can increase **whether the nominal wage increases or decreases**.**Explanation for Graphs/Diagrams:**- **Columns:** - **Year:** The specific year in which the data is recorded. - **Annual Inflation Rate (percent):** Shows the percentage increase in price levels compared to the previous year. - **Annual Nominal Wage Growth (percent):** Indicates the percentage change in average nominal wages compared to the previous year. - **Annual Real Wage Growth (percent):** Reflects the percentage change in real income after adjusting for inflation; it's the difference between nominal wage growth and inflation rate.- **Symbols** (Checks and Crosses): - Green checks indicate correct calculations or conclusions. - Red crosses indicate incorrect calculations or conclusions. This table helps understand the relationship between inflation, nominal wage growth

The difference between yearly nominal wage growth and the annual inflation rate is used to compute…

The table below shows the annual change in the average nominal wage and inflation rate since 2008. a. Compute the percentage change in real income for each year shown in the table. Instructions: In part a, round your answers to two decimal places. In parts b and c, enter your answers as a whole number. If entering a negative number, include a minus sign. Percentage Changes in Nominal Income and Prices

The table below shows the annual change in the average nominal wage and inflation rate since 2008. a. Compute the percentage change in real income for each year shown in the table. Instructions: In part a, round your answers to two decimal places. In parts b and c, enter your answers as a whole number. If entering a negative number, include a minus sign. Percentage Changes in Nominal Income and Prices

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations

Section: Chapter Questions

Problem 13P

See similar textbooks

Similar questions

If inflation rises unexpectedly by 5, indicate for each of the following whether the economic actor is helped, hurt, or unaffected: A union member with a COLA wage contract Someone with a large stash of cash in a safe deposit box A bank lending money at a fixed rate of interest A person who is not due to receive a pay raise for another 11 months
The total price of purchasing a basket of goods in the United Kingdom over four years is: year 1=940, year 2=970, year 3=1000, and year 4=1070. Calculate two price indices, one using year 1 as the base year (set equal to 100) and the other using year 4 as the base year (set equal to 100). Then, calculate the inflation rate based on the first price index. If you had used the other price index, would you get a different inflation rate? If you are unsure, do the calculation and find out.
Rosalie the Retiree knows that when she retires in 16 years, her company will give her a one-time payment of 20,000. However, if the inflation rate is 6 per year, how much buying power will that 20,000 have when measured in todays dollars? Hint: Start by calculating the rise in the price level over the 16 years.
The index number representing the price level changes from 110 to 115 in one year and then from 115 to 120 the next year. Since the index number increases by five each year, is five inflation rate each year? Is the inflation rate the same each year? Explain your answer.
If, over time, wages and salaries on average rise at least as fast as inflation, why do people worry about how inflation affects incomes?
The table below shows the annual change in the average nominal wage and inflation rate since 2008. a. Compute the percentage change in real income for each year shown in the table. Instructions: In part a, round your answers to two decimal places. In parts b and c, enter your answers as a whole number. If entering a negative number, include a minus sign. Percentage Changes in Nominal Income and Prices Year 2008 2009 2010 2011 2012 2013 Annual Inflation Rate (percent) 3.78% -0.39 1.6 3.09 2.02 1.42 Annual Nominal Wage Growth (percent) 0.31% -1.1 -0.69 1.27 2.46 2.07 Annual Real Wage Growth (percent) b. Of the years listed above, the paycheck of the average worker declined in c. Of the years listed above, the purchasing power of the average worker declined in of the six years. d. The average real income of households can increase whether the nominal wage increases or decreases of the six years.
Now you see what the BLS economist do, except with a more complex basket of goods. Now try to construct an index and determine the inflation rate on your own. The table shows the prices of fruit purchased by the typical college student from 2001 to 2004. What is the amount spent each year on the “basket” of fruit with the quantities shown in column 2? (5 points) Items Qty. 2001 2002 2003 2004 Price Amount Spent Price Amount Spent Price Amount Spent Price Amount Spent Apples 10 $0.50 $0.75 $0.85 $0.88 Bananas 12 $0.20 $0.25 $0.25 $0.29 Grapes 2 $0.65 $0.70 $0.90 $0.95 Raspberries 1 $2.00 1.9 2.05 2.13 $2.13 Total Construct the price index for a “fruit basket” in each year using 2003 as the base year. (5 points) Compute the inflation rate…
None
In Zimbabwe the rate of inflation hit 90 sextillion percent in 2009, with prices increasing tenfold every day. At that rate, how much would a $100 textbook cost one week later? Hint: Use the following equation to calculate future price: Future price = (current price) x (inflation rate)', where t is the number of days in the future. billion
Which of the following is NOT a step in calculating the inflation rate from one period to the next? Collect the prices from the stores where people shop. O Find out what people typically buy. Measure the change in quality of the products from one period to the other. Find the total value of the basket of goods and services.
If the real interest rate (rreal) you pay on a one-year loan ends up being 7%, and inflation was 6% over that year, what is the nominal interest rate on your loan? Hint: enter your answer without a % sign Example: if the answer is 4%, enter 4
Suppose two parties agree that the expected inflation rate for the next year is 6 percent. Based on this, they enter into a loan agreement where the nominal interest rate to be charged is 6 percent. If inflation for the year turns out to be 4 percent, who gains and who loses? Instructions: Enter your responses as whole numbers. The ex ante real interest rate is 10 percent. This is what borrowers think they are paying and lenders think they are earning. With the actual inflation of 4 percent, the ex post real interest rate will be percent.