Your Grandfather Tells You That He Earned

question 65

Essay

Your grandfather tells you that he earned $.50 per hour at his job when he was a boy in 1929.
a.Given that the CPI was 17.1 in 1929 and 184.0 in 2003, how much would you have to make in 2003 to have the same real hourly wage?
b.You made $5.50 an hour working during 2003. Were you better off than your grandfather in terms of purchasing power? Explain.
c.Your grandfather also tells you that a soda cost $.05 in 1929, and you know a soda cost $.55 in 2003. You decide to use the price of a soda as the price index. How much would the 2003 "soda equivalent" of $.50 per hour in 1929 be?

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Definitions:

Linguistic Intelligence

A cognitive ability that involves sensitivity to spoken and written language, the ability to learn languages, and the capacity to use language to accomplish certain goals.

Gardner

Refers to Howard Gardner, a psychologist best known for his theory of multiple intelligences, which posits that intelligence is multifaceted and not solely measured by an IQ score.

David Wechsler

David Wechsler was a psychologist who developed well-known intelligence scales, such as the Wechsler Adult Intelligence Scale (WAIS).

Intelligence Testing

The assessment of an individual's mental capabilities and cognitive functions through various standardized tests.