1. Table 1 shows the price of gasoline and the CPI for four years. The reference base period is 1982–1984. Calculate the real price of gasoline each year. In which year was this real price highest and in which year was it lowest?

2. Ford says it cut its labor costs by 35 percent between 2006 and 2011. Ford’s wage rate, including benefits, was $80 an hour in 2006 and $58 an hour in 2011. The CPI was 202 in 2006 and 218 in 2011. Did the real wage rate fall by more or less than 35 percent?

3. Sally worked all year and put her savings into a mutual fund that paid a nominal interest rate of 7 percent a year. During the year, the CPI increased from 165 to 177. What was the real interest rate that Sally earned?

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TABLE 1 Year 1985 1995 2005 2015 Price of gasoline (cents per gallon) 112 115 230 245 CPI 107.6 152.4 195.3 237.0