Earnings and CPI Annual Averages Thank Youuuuuuu! Jack lives in Denver, CO and S
ID: 1156065 • Letter: E
Question
Earnings and CPI Annual Averages
Thank Youuuuuuu!
Jack lives in Denver, CO and Sam lives in Pittsburgh, PA. Use the CPI annual averages for Denver and Pittsburgh below to fill in the blank cells of the next table of "Earnings and CPI Annual Averages, Denver, CO and Pittsburgh, PA." Show your work by typing in the formulas you use Consumer Price Index All items All Urban Consumers Base Period: 1982-84 100 Denver-Aurora Lakewood, CO 212.45 220.29 224.57 230.79 237.20 239.99 246.64 255.00 Year Pittsburgh, PA 2010 2011 2012 2013 2014 2015 2016 2017 215.41 225.08 232.89 235.86 238.96 240.60 244.56 250.05Explanation / Answer
$65,000
Real Income = (Nominal Income /CPI) *100
Price Indexes alone are not alone sufficient to compare the prices in two different regions.They are plain indexes, much like percetages which alone do not represent anything.However if we study the time series individually, it can be seen that prices have risen both in Denver and Pittsburgh.
Now if 2 individuals earn $1000 in Denver and Pittsburgh, then
In Pittsburgh
2010 the real value would be $464.23 (by the same formula)
2017 th real value would be $ 400
In Denver
in 2010 the real income would be 470.69
in 2017 th real income would be 392.15
Comparing the above it is evident that in 2017 the real value of $1000 in Pittsburgh is less than that in Denver. Thus prices are higher in Pittsburgh at present.
2015 2016 Jack earned in Denver,CO $65.000 $75000 Sam earned in Pittsburgh,PA $55,000$65,000
CPI-U All Items for Denver (Annual Averages) 239.99 246.64 CPI-U All Items for Pittsburgh (Annual Averages) 240.60 244.56 Jack's real (inflation adjusted) earnings in Denver,expressed in 1982-84 dollar $27084.5 $30,408.7 Sam's real (inflation-adjusted) earnings in Pittsburgh, expressed in 1982-84 dollar $22,859.5 $26,578.3Related Questions
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