Question

What can be said about real average hourly earnings and nominal average hourly earnings between 2008 and​ 2010? A. Real average hourly earnings increased and nominal average hourly earnings decreased. B. Both real and nominal average hourly earnings decreased. C. Real average hourly earnings decreased and nominal average hourly earnings increased. D. Both real and nominal average hourly earnings increased.

Answer 1

Remainder part of the Question:

Year    Nominal avg. CPI

2008       16.00         202

2009       17.00         207

2010        18.00         209

Answer:

Option D Both real and nominal average hourly earnings increased.    

Explanation:

The real average hourly rate for year 2008 = 16 * 100 / 202 = 7.92%

The real average hourly rate for year 2009 = 17 * 100 / 207 = 8.21%

The real average hourly rate for year 2010 = 18 * 100 / 209 = 8.61%

We can see from the above scenario that the real avearage hourly rate has increased from the year 2008 to year 2010. We can also see that the inflation has also increased as the CPI is growing from the year 2008 to 2010.