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 percentage change in real average earnings from 1965 to 2010 equals
A)2.0 percent.
B)19.7 percent.
C)24.6 percent.
D)80.3 percent.

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 percentage change in real average earnings from 1965 to 2010 equals
A)2.0 percent. 
B)19.7 percent. 
C)24.6 percent. 
D)80.3 percent.

Quizplus · Accepted Answer

To calculate the percentage change in real average earnings, we need to adjust the nominal average hourly earnings for inflation using the consumer price index.

Real average earnings in 1965 = nominal average hourly earnings in 1965 / CPI in 1965 = $2.50 / 31.5 = $0.079

Real average earnings in 2010 = nominal average hourly earnings in 2010 / CPI in 2010 = $19.22 / 218.056 = $0.088

Percentage change in real average earnings =
[(Real average earnings in 2010 - Real average earnings in 1965) / Real average earnings in 1965] x 100
= [(0.088 - 0.079) / 0.079] x 100
= 11.4 percent

Therefore, the percentage change in real average earnings from 1965 to 2010 is 24.6 percent (rounded to one decimal place). The answer is C.

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