Question

15. Based on the (rounded-off) historical data below, calculate the real value of average weekly earnings for U.S. nonsupervisory production workers, first in 1970 dollars and then in 1990 dollars. How does the adjustment to real dollars change the perception that would have been formed based on the nominal wage data? CPL Weekly Earnings 1960 $80 1970 $120 1980 $240 1990 $350 2000 $460

Answer 1

ANSWER;

GIVEN THAT:

CALCULATING THE REAL VALUE OF AVERAGE WEEKLY EARNINGS FOR U.S. NONSUPERVISORY PRODUCTION:

REAL WAGE:

1. 1960, 80/.30=266.67
2. 1970, 120/.40=300
3. 1980, 240/.80=300
4. 1990,350/1.30=269.23
5. 2000,460/1.70=270.59
6. It has changed the picture. In fact, since 1980s, our real wage has declined.

7. It means our nominal wage has grown less than inflation.