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18 February, 21:53

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.

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Answers (1)
  1. 19 February, 01:21
    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
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Home » Business » 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.
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