Hyperinflation has struck your country! The economy is experiencing 1.41% inflation every minute. Your boss has just paid you $710 for your work that day, and you need to spend it fast before it loses its value. It takes you 24 minutes to get to the store, pick your items, and go to the register. Adjust the $710 for the inflation that has occurred over the 24 minutes to find your real wage for the day at the time you were paid. Hint #1: If there was 5% inflation, and I wanted to adjust $100 to its value before the inflation occurred, I would divide by 1.05. Hint #2: The growth formula is (1 + i)^t Do not round until your final answer, at which point you may round to two decimal places.

Hyperinflation has struck your country! The economy is experiencing 1.41% inflation every minute. Your boss has just paid you $710 for your work that day, and you need to spend it fast before it loses its value. It takes you 24 minutes to get to the store, pick your items, and go to the register. Adjust the $710 for the inflation that has occurred over the 24 minutes to find your real wage for the day at the time you were paid. Hint #1: If there was 5% inflation, and I wanted to adjust $100 to its value before the inflation occurred, I would divide by 1.05. Hint #2: The growth formula is (1 + i)^t Do not round until your final answer, at which point you may round to two decimal places.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Unemployment And Inflation

Section: Chapter Questions

Problem 3.7P

See similar textbooks

Similar questions

A fixed-rate mortgage has the same interest rate over the life of the loan, whether the mortgage is for 15 or 30 years. By contrast, an adjustable-rate mortgage changes with market interest rates over the life of the mortgage. If inflation falls unexpectedly by 3, what would likely happen to a homeowner with an adjustable-rate mortgage?
With in 1 or 2 percentage points, what has the U.S. inflation rate been during the last 20 years? Draw a graph to show the data.
Compute the inflation rate for fruit prices from 2001 to 2004.
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.
Inflation rates, like most statistics, are imperfect measures. Can you identify some ways that the inflation rate for fruit does not perfectly capture the rising price of fruit?
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.
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.
What has been a typical range of inflation in the U.S. economy in the last decade or so?
Go to this website (http://www.measuringworth.com/ppowerus/) for the Purchasing Power Calculator at measuringWorth.com. How much money would it take today to purchase what one dollar would have bought in the year of your birth?
Over the last 10 years, the average rate of inflation has been 1.51%. What is thepurchasing power of a dollar today in terms of what a dollar could purchase in 2012?
The average annual cost(tuition, fees, and room and board) at four-year private universities rose from $6,070in 1980 to $29,257 in 2004. Calculate the percentage rise in cost from 1980 to2004, and compare it to the overall rate of inflation as measured by the Consumer Price Index. The Consumer Price Index for 1980 is82.6and the Consumer Price index for 2004 is 188.9.The percentage rise in cost from 1980 to 2004 is %??(Round to the nearest tenth as needed.)
If inflation has been 2% each year for the past 3 years, and over that time your salary has increased from $80,000 per year to $84,000 per year, then your real wage has Not changed Increased by more than nominal wage has increased. Increased by less than nominal wage has increased. Decreased