Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 22, Problem 2.4P
To determine
Minimum wage in indexation.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The CPI’s basket of goods includes potato chips, over half of which are made from potatoes grown in Idaho. Wildfires this summer destroyed acres of potato crops in Idaho, causing a spike in the price of potatoes, and there was a 30% increase in the price of potato chips. As a result, the CPI calculation showed an increase of 2% in the Fall of this year versus last year. Please explain if this 2% increase is reflective of the overall price level, and if not, why?
Suppose that the following table shows the average retail price of butter (the price of salted, grade AA butter per pound) and the Consumer Price Index (CPI) from 1980 to 2010, scaled so that the CPI = 100 in 1980.
1980
2010
100.00
1.96
218.06
3.12
CPI
Retail price of butter
Calculate the real price of butter in 1980 dollars. (Enter your responses rounded to two decimal places in the table below.)
Real price of butter
1980
1.96
CPI
1990
158.56
1.94
1980
1990
1.22
Between 1980 and 2000, the real price of butter has decreased
What is the percentage change in the real price (in 1980 dollars) from 1980 to 2000?
The real price of butter has decreased by 42.35 %. (Enter your response rounded to two decimal places.)
Next, convert the CPI into 1990 = 100 and determine the real price of butter in 1990 dollars.
To do this, first convert the CPI into 1990 dollars in the table below. (Enter your responses rounded to two decimal places in the table below.)
1990
100
2000
208.98
2.37
2000
1.13
2000
■…
In 1950, the federal minimum wage for the United States was $ 0.75. How much would this minimum wage be worth in 2021?
A) $ 8.16
B) $ 8.83
C) $ 9.21
D) $ 9.82
Chapter 22 Solutions
Principles of Economics (12th Edition)
Knowledge Booster
Similar questions
- Assess whether the following would be counted as unemployed in the Current Employment Statistics survey. A husband willingly stays home with children while his wife works. A manufacturing worker whose factory just closed down. A college student doing an unpaid summer internship. A retiree. Someone who has been out of work for two years but keeps looking for a job. Someone who has been out of work for two months but isnt looking for a job. Someone who hates her present job and is actively looking for another one. Someone who decides to take a part time job because she could not find a full time position.arrow_forwardSuppose the CPI is 120 in year 1 and 150 in year 2. If First National Bank charges a nominal interest rate of 30 percent in year 2, what is the bank's real interest rate? Explain.arrow_forwardI need help with this problemarrow_forward
- Back in 1920, California minimum hourly wage was $0.33. In 2018, the minimum wage was $11.0O. Did workers in 1920 get paid the same (in terms of purchase power) as workers in 2018? Explain your answer. (hint: CPI in 1920 was 20 while CPI in 2018 equaled 251.1)arrow_forwardConsider the simple economy that produces only three products. Use the information in the following table to calculate the (annual rate of) inflation for 2020 as measured by the consumer price index (CPI) Product Haircuts Hamburgers Movies BASE YEAR (2010) Price $10.00 2.00 15.00 Quantity 1 8 7 2019 Price $11.00 2.45 15.00 2020 Price $16.20 2.40 14.00 Using the information in the table, the CPI for 2019, with 2010 as the base year, is (Enter your response rounded to one decimal place.) The inflation rate for 2020 as measured by the consumer price index (CPI) is%. (Enter your response rounded to two decimal places) 4arrow_forwardThe table below presents some data on the federal minimum wage and the CPI for several years. Fill in the column for “minimum wage in 2020 $s." Year Minimum wage CPI Minimum wage in 2020 $s 1949 $0.40 23.8 1968 $1.60 34.8 1995 $4.25 152.4 2020 $7.25 259.1 2024 (proposed) $15 306 (projected) What was the 1949 minimum wage equivalent to in 2020 $s?arrow_forward
- The table below presents some data on the federal minimum wage and the CPI for several years. Fill in the column for "minimum wage in 2020 $s." Year Minimum wage CPI Minimum wage in 2020 $s 1949 $0.40 23.8 1968 $1.60 34.8 1995 $4.25 152.4 2020 $7.25 259.1 2024 (proposed) $15 306 (projected) What was the 1949 minimum wage equivalent to in 2020 $s? 4.35 QUESTION 7 Many people have proposed raising the minimum wage in increments so that it is $15 by 2024. Some people say that this $15 minimum wage would restore the purchasing power that the minimum wage used to have. Others say it would make the minimum wage higher, in real terms, that it has ever been before. What is the best evaluation of these claims? O the $15 minimum wage would have more purchasing power than any other year in the table O the $15 minimum wage is lower, in real terms, than most of the other years in the table O the $15 minimum wage would be the second highest in real terms (1968 is the highest) O there isn't enough…arrow_forward9. In 2015, republican presidential candidate Donald Trump made the statement, "It has not been easy for me. It has not been easy for me. I started off in Brooklyn. My father gave me a small loan of a million dollars". Donald Trump obtained this "small loan" in 1968. In 1968 the Consumer Price Index (CPI) was 34.8. As of May 2019, the CPI was 256.092. If that "small loan" was adjusted to May 2019 dollars, how much did Donald Trump get (in 2019's currency)?arrow_forwardUse the following table to answer the question. The table shows the prices and the quantities consumed in Vegetarian Country. Suppose the base year is 2020. Also, suppose that 2020 is the year the typical consumption basket was determined, so the quantities consumed in 2020 are the only quantities needed to calculate the CPI in each year. Year Price of Carrots Quantity of Carrots Price of Celery Quantity of Celery 2020 $2.00 100 $1.00 100 2021 2.50 90 0.90 120 2022 2.75 105 1.00 130 What are the values of the CPI in 2020, 2021, and 2022, respectively? a. 2020: 100; 2021: 111; 2022: 139.6 b. 2020: 100; 2021: 109.2; 2022: 116 c. 2020: 100; 2021: 113.3; 2022: 125 d. 2020: 83.5; 2021: 94.2; 2022: 100 e. None of the answer choices are correct.arrow_forward
- 3.2 The table below lists the actual minimum wage and CPI in 1974 and in 2017. Using the table, calculate the real minimum wage for 1974 and 2017. Are workers better off in terms of the purchasing power of a dollar in 1974 or 2017? Explain why Year Nominal Minimum CPI Wage 2.00 7.25 (1982=100) 49.3 1974 2017 244.3arrow_forwardCongratulations! Your boss has given you a raise. However, you want to know whether your purchasing power has actually increased, since inflation is rising as well. The table below gives you data for wages and the Consumer Price Index (CPI) for the last two years. Year 1 Year 2 Wage ($/day) $2,000 $2,100 The nominal percentage increase in your wage is%. (Round your answer to one decimal place.) The real percentage increase in your wage is%. (Round your answer to one decimal place.) CPI 115 128.8arrow_forwardWhat would $1 in 1966 be worth today in 2021? A) $ 7.71 B) $ 7.92 C) $ 8.07 D) $ 8.93arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning