Answered

Discover answers to your most pressing questions at Westonci.ca, the ultimate Q&A platform that connects you with expert solutions. Explore comprehensive solutions to your questions from a wide range of professionals on our user-friendly platform. Our platform provides a seamless experience for finding reliable answers from a network of experienced professionals.

If someone was hired at a wage of [tex]$19.59 per hour in 2010, and in 2015 they were still making $[/tex]19.59 per hour (no raises), what is the relative change in their real wage?

Hint: Consider the CPI. Round to the tenth of a percent.

Sagot :

GinnyAnswer
To understand the effect of inflation on a person's wage over the years, we need to consider the Consumer Price Index (CPI). The CPI measures changes in the price level of a market basket of consumer goods and services purchased by households. Here's a step-by-step solution to determine the relative change in real wage from 2010 to 2015:

1. Determine the initial wage and CPI values:
- Initial hourly wage in 2010: $19.59
- CPI in 2010: 218.056
- CPI in 2015: 237.017

2. Calculate the real wage in 2010:
- The real wage adjusts for inflation and represents the purchasing power of the wage.
- Formula: Real Wage = Nominal Wage / (CPI / 100)
- Real wage in 2010 = [tex]$19.59 / (218.056 / 100) ≈ $[/tex]8.98

3. Calculate the real wage in 2015:
- Using the same formula, we calculate the real wage in 2015.
- Real wage in 2015 = [tex]$19.59 / (237.017 / 100) ≈ $[/tex]8.27

4. Determine the relative change in the real wage:
- The relative change measures the percentage change in purchasing power.
- Formula: Relative Change = ((Real Wage in 2015 - Real Wage in 2010) / Real Wage in 2010) 100
- Relative Change = (([tex]$8.27 - $[/tex]8.98) / $8.98) 100 ≈ -8.0%

Therefore, the relative change in their real wage from 2010 to 2015 was approximately -8.0%, indicating a decrease in purchasing power despite the nominal wage staying the same.
We appreciate your time on our site. Don't hesitate to return whenever you have more questions or need further clarification. We hope our answers were useful. Return anytime for more information and answers to any other questions you have. We're here to help at Westonci.ca. Keep visiting for the best answers to your questions.