$$\begin{array}{l}
\begin{array} { | c | c | c | }
\hline \text { Year } & \begin{array} { c }
\text { Antonio's Nominal } \
\text { Hourly Wage }
\end{array} & \begin{array} { c }
\text { Consumer Price } \
\text { Index }
\end{array} \
\hline 2006 & \$ 8.40 & 201.6 \
\hline 2010 & \$ 9.05 & 218.1 \
\hline
\end{array}\
\text { Table } 8.2
\end{array}$$ Refer to Table 8.2.From 2006 to 2010,Antonio received a total of $0.65 in pay raises,and the CPI also increased as shown in the table.What was Antonio's real wage in 2006,if 2010 is used as the base year?
A) $8.40.
B) $9.05.
C) $9.09.
D) $8.37.

Question

$$\begin{array}{l}
\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Antonio's Nominal } \
\text { Hourly Wage }
\end{array} & \begin{array} { c } 
\text { Consumer Price } \
\text { Index }
\end{array} \
\hline 2006 & \$ 8.40 & 201.6 \
\hline 2010 & \$ 9.05 & 218.1 \
\hline
\end{array}\
\text { Table } 8.2
\end{array}$$ Refer to Table 8.2.From 2006 to 2010,Antonio received a total of $0.65 in pay raises,and the CPI also increased as shown in the table.What was Antonio's real wage in 2006,if 2010 is used as the base year?
A) $8.40.
B) $9.05.
C) $9.09.
D) $8.37.

Quizplus · Accepted Answer

To find Antonio's real wage in 2006 using 2010 as the base year, we need to adjust his nominal wage for inflation. We can use the formula:Real wage in 2006 = Nominal wage in 2006 x (CPI in 2010 / CPI in 2006)Substituting the values from the table, we get:Real wage in 2006 = $8.40 x (218.1 / 201.6) = $9.09Therefore, Antonio's real wage in 2006, using 2010 as the base year, was $9.09.