31) If there is inflation and we compare the changes in a nominal variable over time versus its real counterpart, such as the nominal wage rate versus the real wage rate, we find that the
A) two increase at about the same rate because of inflation.
B) real wage rate increases faster because of inflation.
C) nominal wage rate increases faster because of inflation.
D) two decrease at about the same rate because of inflation.
E) two change at a rate that does not depend on the inflation rate.
32) Which of the following statements about the nominal and the real wage rates is correct?
A) The nominal wage rate equals the real wage rate divided by the CPI and then multiplied by 100.
B) The nominal wage rate is measured in the dollars of a base year.
C) The real wage rate is measured in current year dollars.
D) The real wage rate indicates how many goods and services can be purchased with an hour’s labor.
E) The real wage rate equals the nominal wage rate multiplied by the CPI then divided by 100.
33) If the nominal wage is $30 in 2011 and the CPI is 202 in 2011, then the real wage in 1982-1984 dollars
A) is $30.
B) is $14.85.
C) is $1.48.
D) is $29.00.
E) cannot be calculated without the past year wage rate.
34) In 2008, Cameron began his career with SBC. His starting salary was $32,000. By 2011, his salary increased to $35,000. If the CPI was 100.0 in 2008 and 107.5 in 2011, Cameron’s 2011 real income is
A) $32,000.
B) $32,558.
C) $34,400.
D) $37,625.
E) $35,000.
35) Your starting salary is $35,000 per year. After one year, you are given a raise that increases your nominal salary. Which of the following salaries would you prefer the most?
A) a $36,000 salary with a CPI of 103.0
B) a $38,000 salary with a CPI of 104.0
C) a $39,000 salary with a CPI of 109.0
D) a $39,000 salary with a CPI of 110.0
E) a $37,000 salary with a CPI of 106.0
36) If you are earning $20,000 this year and the CPI is 165, your real income in base year prices is
A) $121.21.
B) $12,121.21.
C) $20,000.
D) $16,500.
E) $33,000.
37) If your real income in base year prices is $50,000, then if the CPI is 170, what is your nominal income?
A) $29,411.76
B) $50,000.00
C) $85,000.00
D) $71,428.57
E) $70,000.00
38) If your nominal income is $75,000 and your real income in base year prices is $60,000, what is the CPI?
A) 100
B) 125
C) 80
D) 250
E) 200
39) If your nominal income is $80,000 and your real income in base year prices is $71,500, what is the CPI?
A) 89
B) 100
C) 112
D) 106
E) 150
40) Sharisse brags to her mother that her starting salary as a management trainee is $36,000, much higher than her mother’s starting salary of $21,000 as a management trainee several years ago. If the CPI the year Sharisse begins work is 181.2 and the CPI the year her mother started work was 109.1, Sharisse is
A) wrong. Adjusting for price changes, her salary is less than her mother’s salary.
B) wrong. Adjusting for quantity changes, her salary is less than her mother’s salary.
C) correct. Adjusting for price changes, her salary is more than her mother’s salary.
D) correct. Adjusting for quantity changes, her salary is more than her mother’s salary.
E) maybe wrong and maybe right. Adjusting for quantity changes, her salary is less than her mother’s salary but with the information given we are unable to further adjust for price changes.
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