Question

problem 2 nominal vs real minimum wage

PART II. PROBLEM: NOMINAL VS REAL (20 Marks) The table below show the nominal minimum wage in BC for selected years and the corresponding consumer price index (CPI) for those years. Year Year Nominal Minimum Wage (5 per hour) Consumer Price Index (2014 = 100) Nominal Minimum Wage (5 per hour) Consumer Price Index (2014 - 100) 1976 1987 1990 1993 1995 1998 2000 3.00 4.00 5.00 6.00 6.50 26.2 57.8 65 9 73.8 77.0 2002 2011 2014 2015 2017 8.00 8.75 10.25 10.45 10.85 12.65 13.85 941 98.0 100.0 101.1 105.1 1080 110.6 7.15 2018 7.60 80 8 2019 1. Based on constant 2014 dollars, calculate the minimum wage for all the years. (Round your answer to the nearest 5 cents.) 2. Interpret the meaning of the real minimum wage rates derived in (1) for 1976 and 2019 3. Plot both the nominal and real minimum wage rates for all the years on the same graph (Graph paper a must.) 4. To have the same purchasing power in 2019 as in 1976, what should the nominal minimum wage be for 2019? (Show your work in all cases.) Real way - Nominal wage vloo

Answer 1

Year Nominal Minimum wuge CPI Real Minimum wage 3.0 11.45 4.00 6.92 5.co 6.00 1976 1987 1990 1993 1995 1998 20 2002 2011 2014 2015 26.2 57.8 65.9 73.8 77.0 78.6 80.8 6.50 7.15 5 7.60 84-1 7.58 88.13 8.44 9.04 9.40 9.51 8.92 10.25 10:33 10.32 11.71 1252 98.0 100.0 1011 9-1S 10.25 10.45 10.85 12.65 13.85 2017 2018 2019 105:1 108.0 110.6 Real minimum wage a Nominal Minimum way - TAI ују