Inflation Calculator: http://www.bls.gov/data/inflation_calculator.htm
#1. (From BLS) According to the Census Bureau, the median value of a home was $11,900 in 1960.
In today’s dollars, how much purchasing power did $11,900 have in 1960? Round to nearest cent.
(5 points)
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#2. (Based on Bolker & Mast. CSM. Exercise 4.7.19.) When is a raise not a raise?
Your employment contract calls for a 6% raise every three years. If you began your employment in the
beginning of 2010, what was your first effective* raise, applied in the beginning of 2013? (10 points)
(*effective = taking inflation into account)
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#3. (10 points) (Based on Bolker & Mast. CSM. Exercise 4.7.8.) Twenty years as two
decades:
(A) Use the inflation rate calculator to find the inflation rate (as a percent)
(i) From 1995 to 2005,
(ii) From 2005 to 2015 and
(iii) From 1995 to 2015.
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(B) Explain why the inflation rate from 1995 to 2015 is not just the sum of the rate from 1995 to 2005
and the rate from 2005 to 2015.
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(C) Use the proper method to compute the inflation rate from 1995 to 2015 correctly from the two
rates for the two previous decades.
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#4. National Debt (20 points) Remember to show all work and identify your sources.
According to the United States Department of Treasury, the national debt [also known as gross
government debt] on January 1st, 2013 was $16,432,730,050,569.12 ˜ $16.5 trillion.
(A) Calculate, to the nearest thousand, the average share of the debt for each person in United
States in 2013.
(B) By some estimates, this debt increases at an average of just $2.5 billion per day. Estimate
the total increase in the debt for one year, to the nearest billion.
(C) Use the web to find the current national debt of the United States and check if the value
supports the claim in (B); then update the average per capita share of the debt.
(D) Use the web to find Greece’s current national debt, and the average share of the debt for
each person.
(E) Find a country whose current national debt per capita is less than $19,000.
#5. (10 points) (Based on Bolker & Mast. CSM. Exercise 4.7.17.) A raise tied to the inflation
rate.
Stella’s current salary is $65,000. Assuming that the current annual inflation rate is 2.5%, consider
these two different ways to calculate a raise that’s “12% over the rate of inflation”:
(A) What is Stella’s new salary if you simply add the inflation rate to her 12% raise and use that as her
percentage raise?
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(B) What will she earn if you first compute her salary after the 12% increase and then increase that to
take inflation into account?
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(C) Which is the best approach (for Stella – since it’s her salary)?
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#6. (Based on Bolker & Mast. CSM. Exercise 4.7.20) (15 points) Private colleges vastly
outspent public peers. The Fort Wayne, IN Journal Gazette reported on July 10, 2010 that:
“Private institutions, on average, laid out $19,520 per student for instruction
[in 2007], a 22 percent increase from a decade earlier”, the Delta Project on Postsecondary
Education Costs, Productivity, and Accountability, a Washington-based nonprofit research
group said Friday. Public universities spent $9,732 for each student, up 10 percent in the
decade, according to the report.
(A) How much did private colleges spent per student in 1997?
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(B) When adjusted for inflation, what was the actual percent change in the amount spent per student
by private colleges from 1997 to 2007? (You may use any method; it may help to treat the increase in
expenditures as “a raise” and use the same approach we used in class to find the “real raise,” or “pay
cut,” if applicable)
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(C) How much did public colleges spent per student in 1997?
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(D) When adjusted for inflation, what was the actual percent change in the amount spent per student
by public colleges from 1997 to 2007? (You may use any method; it may help to treat the increase in
expenditures as “a raise” and use the same approach we used in class to find the “real raise,” or “pay
cut,” if applicable)
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#7. (Based on Bolder & Mast. CSM. 2013. Exercise 6.14.6.) Cash-strapped MBTA proposes
fare increase. (30 points)
On March 29, 2012 the Massachusetts Bay Transportation Authority (MBTA) provided the data
summarized in the table below. Provide the table/graphical
answers to (A) and (B) in a separate MS-Word file.
(A) Create a spreadsheet for this data, with eight rows (one
for each of the eight categories: Card-Bus, Card-Subway,
Senior-Bus, Senior-Subway, Student-Bus, StudentSubway,
Ticket-Bus, Ticket-Subway) and three
columns, for the Category Name, the Existing Fare
and the Proposed Fare. Create a properly labeled bar
graph to display the data. (Hint: select all cells and Insert
clustered column chart). Copy and paste the table and the
bar chart below.
(B) Label the next two columns appropriately to hold the Absolute and Relative (%) changes
(Recall that absolute is “proposed – existing”, while relative is the absolute change as a percent of the
existing). Fill those columns with Excel formulas to compute the correct values. Do not compute the
values elsewhere and enter them in the spreadsheet as numbers. (Refer to Chapter 6 of our textbook
and the Excel QuickRef for additional reminders on Excel formulas). Copy and paste the new table
below. Create a properly labeled bar graph for the Absolute Change, and another one for the Relative
Change. Paste below. Which is more relevant and why?
(C) Imagine that you are addressing a public meeting about these fare increases. How would you
argue that an unfair burden is being placed on people who pay using a Charlie Ticket? How would you
argue that senior citizens are most hard hit?
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