NEWS WIRE PRICE EFFECTS College Tuition in the U.S. Again Rises Faster Than Infl

Question

NEWS WIRE PRICE EFFECTS College Tuition in the U.S. Again Rises Faster Than Inflation Nov. 13 (Bloomberg)- College prices in the U.S. have again increased faster than the rate of inflation, extending a decades-long pattern of higher-education costs. Tuition and fees at private nonprofit colleges climbed 3.7 percent on average to $31,231 this academic year, according to a report today by the College Board. For in-state residents at four-year public schools, costs rose 2.9 percent to $9,139. Inflation, measured by the personal consumption expenditures index, rose 1.4 percent in the year through September Source: Janet Lorin, Bloomberg.com, November 12, 2014. According to the News Wirein the 2014-2015 academic year at pnvate nonprofit colleges by what percentage did the a. nominal price of tuition increase? b. real price of tuition increase? References Worksheet Difficuity 2 Medium

Explanation / Answer

The nominal increase sis 3.7% For real increase we will take into account the inflation rate which is also growing So, the real increase is (3.7-1.4) = 2.3%

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