Macroeconomics Assignment

642 Words3 Pages
Scenario 1 Task 1 Aggregate wage measures the overall cost of labor, and the index shows the percentage of change in this value over the period examined in this case, there has been an increase of 4.59% in the aggregate wage. The aggregate for each year is calculated by multiplying the rate by the number of staff for each grade (to weight the wages correctly), then summing the results; the index is simply the current year divided by the base year and multiplied by 100. The average rate measures the costs of labor in the amount-per-unit of labor rather than as an overall or total measure, in this case showing a 2.47% increase over the period in question. Average rates for each year are calculated by taking the same sum of rate times number of staff for each grade and dividing by total number of staff; the index is current year/base year * 100. Task 2 The Laspeyres figure for the current year is by definition (and calculation) 100, and for Paasche is 1000. The former is calculated by taking the total number of staff in the base year (2010) and multiplying by the average wage in the current year (2012); this product is then divided by the product of total staff in the base year and the average wage in the base year, with the entire result multiplied by 100. This index effectively shows what the company would have paid for 2010's labor in 2012 2.47% more. The Paasche Index is calculated by taking the sum of staff numbers in the current year and multiplying by the average
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