In Questions Make the Assumption That the Change in Housing

question 78

Multiple Choice

In Questions make the assumption that the change in housing prices exactly matches the change in the CPI. In fact, housing is only part of the CPI, and figures into the CPI through rents rather than sale prices, so this assumption may be far from correct.
-Zeke bought a house in 1981 for $19,000 and sold it in 1997. If the 1981 CPI is 90.9 and the 1997 CPI is 160.5, how much would the house be worth in 1997 dollars?

• A) $26,300
• B) $27,860
• C) $29,808
• D) $33,548

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Definitions:

Wage Increases

Adjustments to employee salaries that lead to a higher rate of pay, often in response to factors like inflation, performance, and market demands.

Labor Productivity

measures the output produced per unit of labor input, indicating how efficiently labor is used in the production process.

Price Level

A measure of the average prices of goods and services in an economy over a period of time.

Wage Rate

The standard amount of compensation individuals receive in exchange for performing a certain task or job per unit of time.