Table 20-18
$$\begin{array} { | c | c | c | }
\hline \text { Year } & \begin{array} { c }
\text { Nominal Average Hourly } \
\text { Earnings }
\end{array} & \begin{array} { c }
\text { CPI } \
( \mathbf { 1 9 8 2 - 1 9 8 4 } = \mathbf { 1 0 0 } )
\end{array} \
\hline 2014 & \$ 10 & 100 \
\hline 2015 & 10 & 105 \
\hline 2016 & 12 & 117 \
\hline
\end{array}$$
-Refer to Table 20-18.Looking at the table above,what is the rate of growth of real average hourly earnings from 2015 to 2016?
A)7.8%
B)6.25%
C)4%
D)-4%

Question

Table 20-18
 $$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Nominal Average Hourly } \
\text { Earnings }
\end{array} & \begin{array} { c } 
\text { CPI } \
( \mathbf { 1 9 8 2 - 1 9 8 4 } = \mathbf { 1 0 0 } )
\end{array} \
\hline 2014 & \$ 10 & 100 \
\hline 2015 & 10 & 105 \
\hline 2016 & 12 & 117 \
\hline
\end{array}$$
-Refer to Table 20-18.Looking at the table above,what is the rate of growth of real average hourly earnings from 2015 to 2016?
A)7.8%
B)6.25%
C)4%
D)-4%

Quizplus · Accepted Answer

The rate of growth of real average hourly earnings from 2015 to 2016 is calculated as follows:Real average hourly earnings in 2015 = Nominal average hourly earnings in 2015 / CPI in 2015 = 10 / 105 = 0.0952Real average hourly earnings in 2016 = Nominal average hourly earnings in 2016 / CPI in 2016 = 12 / 117 = 0.1026Rate of growth of real average hourly earnings from 2015 to 2016 = (Real average hourly earnings in 2016 - Real average hourly earnings in 2015) / Real average hourly earnings in 2015 = (0.1026 - 0.0952) / 0.0952 = 0.078 = 7.8%Therefore, the rate of growth of real average hourly earnings from 2015 to 2016 is 7.8%.

Table 20-18 -Refer to Table 20-18