Table 20-8

The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 20-8.The percentage change in real average earnings from 1965 to 2010 equals
A) 2.0 percent
B) 19.7 percent.
C) 24.5 percent.
D) 80.3 percent.

Question

Table 20-8
  
The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 20-8.The percentage change in real average earnings from 1965 to 2010 equals
A) 2.0 percent 
B) 19.7 percent. 
C) 24.5 percent. 
D) 80.3 percent.

Quizplus · Accepted Answer

Real average earnings equals nominal average earnings divided by the consumer price index (CPI) multiplied by 100.

Real average earnings in private industry in 1965:
$2.50/31.5 x 100 = 7.94

Real average earnings in private industry in 2010:
$22.86/218.056 x 100 = 10.49

The percentage change in real average earnings from 1965 to 2010 equals:

[(10.49-7.94)/7.94] x 100 = 24.5 percent.

Therefore, the best choice is C, 24.5 percent.

Table 20-8 the Table Above Reports the Nominal Average Hourly Earnings in Nominal