Your grandfather tells you he earned $0.65 per hour at his job when he was a boy in 1929.Given that the CPI was 17.1 in 1929 and 215.3 in 2008,how much would you have had to make in 2008 to have the same real hourly wage as your grandfather?
A)$0.65
B)$5.14
C)$8.18
D)$11.12

Question

Quizplus · Accepted Answer

To find the real hourly wage in 2008, we need to adjust the 1929 wage for inflation by using the CPI values. We can use the CPI formula:

Real wage (in 2008 dollars) = Nominal wage x (CPI in base year/CPI in comparison year)

Plugging in the values:

Real wage = 0.65 x (215.3/17.1) = 0.65 x 12.5789 = $8.18

Therefore, the answer is (C) $8.18, as this is the amount you would have had to earn in 2008 to have the same real hourly wage as your grandfather did in 1929. The other answer choices are not correct because they do not take into account the inflation adjustment using CPI.

Your Grandfather Tells You He Earned $0