Table 9-14
The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 9-14.The real average hourly earnings for 1965 in 1982-1984 dollars equal
A)$1.28.
B)$6.49.
C)$8.28.
D)$15.45.

Question

Table 9-14
  The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 9-14.The real average hourly earnings for 1965 in 1982-1984 dollars equal
A)$1.28. 
B)$6.49. 
C)$8.28. 
D)$15.45.

Quizplus · Accepted Answer

To calculate real average hourly earnings, we need to adjust the nominal average hourly earnings for inflation using the Consumer Price Index (CPI). The CPI for 1982-1984 is 96.5, while the CPI for 1965 is 31.5.

Real average hourly earnings for 1965 in 1982-1984 dollars = 
(Nominal average hourly earnings in 1965/ CPI in 1965) x (CPI in 1982-1984)

= ($2.50/31.5) x 96.5

= $8.28

Therefore, the correct answer is C) $8.28.

Table 9-14 the Table Above Reports the Nominal Average Hourly