Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 22, Problem 2.4P
To determine
Minimum wage in indexation.
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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?
In 1950, the federal minimum wage for the United States was $ 0.75. How much would this minimum wage be worth in 2021?
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C) $ 9.21
D) $ 9.82
Suppose 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.
Chapter 22 Solutions
Principles of Economics (12th Edition)
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- 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_forwardI need help with this problemarrow_forwardBack 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_forward
- Consider 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_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? 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_forward
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