Ask Question
29 April, 09:14

In​ 1982-84 dollars, the real average hourly wage rate in 2003 was ​ $8.28 and in 2004​, it was ​ $8.24. In 2003​, the CPI was 184.0 and in 2004​, the CPI was 188.9. Calculate the nominal wage rate in 2003 and in 2004.

+2
Answers (1)
  1. 29 April, 09:30
    0
    The nominal wage in 2003 = $15.22

    The nominal wage in 2004 = $15.565

    Explanation:

    Inflation = [ (CPI of 2003 - CPI of base year) : CPI of Base year ] * 100

    = [ (184 - 100) : 100 ] * 100

    = 84%

    Therefore,

    The wage will increase by this inflation to be nominal

    = 8.28 * (1.84)

    = $15.23

    Similarly

    Inflation = [ (CPI of 2004 - CPI of base year) : CPI of Base year ] * 100

    = [ (188.9 - 100) : 100 ] * 100

    = 88.9%

    Therefore,

    The wage will increase by this inflation to be nominal

    = 8.24 * (1.889)

    = $15.565

    Hence,

    The nominal wage in 2003 = $15.22

    The nominal wage in 2004 = $15.565
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “In​ 1982-84 dollars, the real average hourly wage rate in 2003 was ​ $8.28 and in 2004​, it was ​ ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers