If the nominal wage is $30 in 2011 and the CPI is 202 in 2011, then the real wage in 1982-1984 dollars

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BlackTom AI · Accepted Answer

To find the real wage in 1982-1984 dollars, we convert the 2011 nominal wage into the base-year dollars using the price level in both periods.
First, identify the standard conversion formula: Real wage in base-year dollars = Nominal wage × (CPI in base year / CPI in current year).
Next, plug in the values: Nominal wage = $30 in 2011, CPI in 2011 = 202, and CPI in the base year (1982-1984) = 100 (the base period is typically indexed to 100).
Compute the ratio: 100 / 202 ≈ 0.49505.
Multiply by the nominal wage: $30 × 0.49505 ≈ $14.8515.
Rounding to two decimals yields about $14.85 in 1982-1984 dollars.
If options were present, this would correspond to the choice stating roughly $14.85; any alternative that uses a different base-year CPI or an incorrect formula would be misleading.
Note: The key concept here is real wage = nominal wage adjusted by the price level using the base-year CPI, ensuring comparability across time by removing purchasing power differences due to inflation.

ECON 210-003 Homework 6

If the nominal wage is $30 in 2011 and the CPI is 202 in 2011, then the real wage in 1982-1984 dollars

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