A college graduate in 1972 found a job paying $7,200. The CPI was 0.418 in 1972. A college graduate in 2016 found a job paying $60,000. The CPI was 2.40 in 2016. The 1972 graduate's job paid ________ in nominal terms and ________ in real terms than the 2016 graduate's job.

Question

Quizplus · Accepted Answer

The 1972 graduate's job paid less not only in nominal terms ($7,200 is clearly less than $30,000)but also in real terms. The real wage for the 1972 graduate was $17,225 ($7,200/0.418)compared to $25,000 ($60,000/2.40)for the 2016 graduate.

A College Graduate in 1972 Found a Job Paying $7,200