MindTap Economics, 1 term (6 months) Printed Access Card for Gwartney/Stroup/Sobel/Macpherson's Macroeconomics: Private and Public Choice, 16th (MindTap Course List)
16th Edition
ISBN: 9781305648104
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 8, Problem 10CQ
(a)
To determine
Identify the president’s real salary.
(b)
To determine
Identify the year in which president has the highest and lowest salary.
(c)
To determine
Identify the effect of the president’s real salary.
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The nominal salary paid to the president of the United States
along with data for the consumer price index (CPI) are given
for various years below.
YEAR
PRESIDENTIAL SALARY
CPI (2000 = 100)
1920
$75,000
11.6
1940
75,000
8.1
1960
100,000
17.2
1980
200,000
47.9
2000
400,000
100.0
a. Calculate the president's real salary measured in the
purchasing power of the dollar in 2000.
b. In which year was the real presidential salary the highest?
c. The president's nominal salary was constant between
1920 and 1940. What happened to the real salary? Can
you explain why?
Congratulations! Your boss has given you a raise.
However, you want to know whether your purchasing power has actually increased, since inflation is rising as well. The table below gives you data for wages and the Consumer Price Index (CPI) for
the last two years.
Year 1
Year 2
Wage ($/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
128.8
What is the current inflation rate as measured by the Consumer Price Index? You can use either the February or March 2022 figure. Describe the pattern of the Consumer Price Index since the beginning of 2020. Describe the pattern of the CPI since 2010. (Hint: Utilize Trading Economics (Links to an external site.) or FRED (Links to an external site.) to get the data. Please note that the inflation rate is not the same thing as the level of the CPI. The inflation rate is measured as the percentage change in the level of the CPI during a period of time.
Chapter 8 Solutions
MindTap Economics, 1 term (6 months) Printed Access Card for Gwartney/Stroup/Sobel/Macpherson's Macroeconomics: Private and Public Choice, 16th (MindTap Course List)
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