$$\begin{array}{l}
\begin{array} { | c | c | c | }
\hline \text { Year } & \begin{array} { c }
\text { Antonio's Nominal } \
\text { Hourly Wage }
\end{array} & \begin{array} { c }
\text { Consumer Price } \
\text { Index }
\end{array} \
\hline 2006 & \$ 8.40 & 201.6 \
\hline 2010 & \$ 9.05 & 218.1 \
\hline
\end{array}\
\text { Table } 8.2
\end{array}$$ 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 2010,if 2006 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 2010,if 2006 is used as the base year?
A) $8.40.
B) $9.05.
C) $9.09.
D) $8.37.

Quizplus · Accepted Answer

To calculate Antonio's real wage in 2010 using 2006 as the base year, we adjust his 2010 nominal wage for inflation using the Consumer Price Index (CPI). The formula for calculating real wage in the base year's dollars is: Real Wage = (Nominal Wage in Current Year) / (CPI in Current Year / CPI in Base Year). Plugging in the values: Real Wage in 2010 = $9.05 / (218.1 / 201.6) = $9.05 / 1.082 = approximately $8.37.