Question

3. Consider the following information about Nicaragua Year | CPI inflation | Wage | % Real Real change wage wage in wage base 2014 change adjusted real wage ear cordobas wage 2.50 n/a $737.5 | 766.35 199943.98 n/a 2004 | 59.32 | 34.88% | 3.50 | 4090 200995.48 2014135.07 5.687.67 5.907.97 n/a 3.9% 5.50 8.00 The wage is measured as thousands of Nicaraguan Cordobas per month.

Need help, please show work. Some correct answers are already shown. All I need to know is how to work through the problems. Please show work

Answer 1

a) Inflation rates from 1999-2004, 2004-2009 & 2009-2014

Inflation rates based on CPI

= CPI of 2004-CPI of 1999/CPI of 1999 x 100

= 59.32-43.98/43.98 x 100

=15.34/43.98 x 100

= 34.879% or 34.88%

= CPI of 2009-CPI of 2004/CPI of 2004 x 100

= 95.48-59.32/59.32 X 100

= 36.16/59.32 x 100

= 60.957% or 60.95%

= CPI of 2014-CPI of 2009/CPI of 2009 x 100

= 135-07-95.48/95.48 X 100

= 39.59/95.48 x 100

= 41.464% or 41.46%

b) Percentage change in wage across years -1999-2004, 2004-2009 & 2009-2014

Percentage change in wage across year: 1999-2004

Wages in 2004-wages in 1999/wages in 1999 x 100

=3.50-2.50/2.50 x 100

= 1/2.50 x 100

= 40%

Wages in 2009-wages in 2004/wages in 2004 x 100

=5.50- 3.50/3.50 x 100

= 2/3.50 x 100

= 57.142 % or 57.14%

Wages in 2014-wages in 2009/wages in 2009 x 100

=8.00- 5.50/5.50 x 100

= 2.5/5.50 x 100

= 45..454 % or 45.45%

c)

Real wage formula: Nominal wage/Price Level x 100

Real wages for year 1999

= 2.50/43.98 x 100

= 5.684 or 5.68

Real wages for year 2004

= 3.50/59.32 x 100

= 5.90

Real wages for year 2009

= 5.50/95.48 x 100

= 5.76

Real wages for year 2014

= 8.00/135.07 x 100

= 5.92

d) Real wage in each year in 2014 cordobas

Real wage in 1999

Real wage = Wages of 1999 x CPI of 2014 / CPI of 1999

= 2.50 x 135.07/43.98

Real wage = 7.67

Real wage in 2004

Real wage = Wages of 2004 x CPI of 2014 / CPI of 2004

= 3.50 x 135.07/59.32

Real wage = 7.969 or 7.67

Real wage in 2009

Real wage = Wages of 2009 x CPI of 2014 / CPI of 2009

= 5.50 x 135.07/ 95.48

Real wage = 7.78

Real wage in 2014

Real wage = Wages of 2014 x CPI of 2014 / CPI of 2014

= 8.00 x 135.07/ 135.07

Real wage = 8