Solve if you can. Full points only awarded if the questions are right . I\'m abl

ID: 1100374 • Letter: S

Question

Solve if you can. Full points only awarded if the questions are right. I'm able to check them.

1. In 1934, the average wage rate was $0.55 an hour and in 2005 the average wage rate was $15.67 an hour.

The CPI in 1934 ws 13.4 and in 2004 it was 188.9.

The 2004 nominal wage rate that is equivalent to $0.55 an hour in 1934 is $__ an hour.

2. Read the news clip, then answer the following:

Last month, the interest rate on a money fund averaged 0.08% a year and on 5-year CDs it was 2.6% a year. The inflation rate was 0.1% a year.

The real interest rate on a money fund is __ percent a year.

.1. 55* 188.9/13.4= $7.75

2. Using Fisher equation

1+.008= (1+r)(1.001)

1.008/1.001= 1.007 0.7% was real rate.

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