Other things equal, the demand for a good tends to be inelastic (less elastic), the longer the time period considered. more the
1 answer:
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Answer:
The highest median income in purchasing power terms was in 1995, then 2005, 2015, and last 1985
Explanation:
To solve this question we must transform the median household income into comparable units. To do so we use the CPI data given in the problem.
We can arrange everything in a spreadsheet like the attached figure. In column A we have the years, in B the nominal median household income, in the third the CPI divided by 100, this will allow us to deflate and calculate the median income in constant 1982-1984 us dollars (since 1982-1984 will be the numeraire at 1). We do that by dividing column B by C, which is shown in column D.
With these values then we have all the median incomes in comparable units. We now can order and compare them
Answer:
a. 4/3 so the good is more expensive in the U.S
Explanation:
Nominal Exchange rate 1 $ = 10 pesos
Nominal exchange rate is the exchange rate which does not consider the impact of inflation. On the other hand, real exchange rate is calculated after adjusting inflation.
Real Exchange rate = Nominal exchange rate ×
Real Exchange rate = 10 × 20/150 = 4/3
Since the exchange rate is per USD, this means the good is more expensive in the U.S.