Exercise 19-27 Algo Economists often look at retail sales data to gauge the stat

ID: 1165001 • Letter: E

Question

Exercise 19-27 Algo Economists often look at retail sales data to gauge the state of the economy This is especially so in a recession year, when consumer spending has decreased. Consider the following table, which shows US monthly nominal retail sales for 2009. Sales are measured in millions of dollars and have been seasonally adjusted. Also included in the table is the corresponding producer price index (PPl) for 2009 Month Sales PPl Month 343,734 173.4 July SalesPPI 345,820 173.9 354.162 176.3 January February 345,706 173.2 August March April May June 342,509 171.9 September 347,027 175.6 341.650 172.9 October 343,181 172.8 November 357,783 178.7 346.252 176.0 December 357,113 1794 350,964176.2 SOURCE: Federal Reserve Bank of Dallas Click here for the Excel Data File How many times were nominal sales below that of the previous month? a. time(s) Nominal sales

Explanation / Answer

a) 5 times nominal sale is less than previous month, for March,April,July,September and December.

b-1)

Month

Real sales( Nominal sales/PPI)

january

1982.32

february

1995.99

march

1992.49

april

1976.00

may

1986.00

june

1967.34

july

1988.61

august

2008.86

september

1976.24

october

1991.85

november

2002.14

december

1990.60

b-2) 5 times real sales were below that of previous month

%age increase in Nominal sales in 2009 = (Sale in Dec – Sale in Jan)/(Sale in Jan) *100

= (357113 – 343734)/ 343734 * 100

= 3.89%

%age increase in Real sales = (Sale in Dec – Sale in Jan)/(Sale in Jan) * 100

= (1990.60-1982.32)/1982.32 * 100

= 0.41%