Table 5-6 shows an assistant professor's salary and the respective price indexes for the years 1967 and 1997. Use the table to answer questions .
Table 5-6

-Refer to Table 5-6. Calculate the approximate value of real income for an assistant professor in 1997.

Question

Table 5-6 shows an assistant professor's salary and the respective price indexes for the years 1967 and 1997. Use the table to answer questions .
Table 5-6
 
-Refer to Table 5-6. Calculate the approximate value of real income for an assistant professor in 1997.

Quizplus · Accepted Answer

The CPI for 1997 was 160.5, and the CPI for 1983 was 99.6. The assistant professor's nominal income in 1983 was $15,000. To calculate real income, we divide nominal income by the CPI and multiply by 100. So, real income = (15,000 / 99.6) * 100 = $15,050. To find the approximate value of real income in 1997, we divide real income by the CPI for 1997 and multiply by 100. So, real income in 1997 = (15,050 / 160.5) * 100 = $9,375.

Table 5-6 Shows an Assistant Professor's Salary and the Respective