suppose a study found that the real entry-level wage for college graduates of a
ID: 2505796 • Letter: S
Question
suppose a study found that the real entry-level wage for college graduates of a certain university declined by 8 percent between 2000 and 2009. The nominal entry-level wage in 2009 was $12.00 per hour. Assuming that the findings are correct, what was the nominal entry-level wage in 2000? Use the data below.
2002
100.0
2003
102.8
2004
104.7
2005
107.0
2006
109.1
2007
111.5
2008
114.1
2009
114.4
2010
116.5
2002
100.0
2003
102.8
2004
104.7
2005
107.0
2006
109.1
2007
111.5
2008
114.1
2009
114.4
2010
116.5
Explanation / Answer
As real wage = nominal wage-inflation
=> -0.08 = 12-x/x
=> x=11.11
therefore nominal wage in 2000 =$11.11
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