4. Social security benefits increased much more in the 1970's (when inflation was high) than they...

 

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4. Social security benefits increased much more in the 1970's (when inflation was high) than they did in the 1990's. Suppose someone claimed that this shows that social security recipients fared much better during the 1970's than they did during the 1990's because their social security benefits were rising at faster rates. What do you need to know to determine if such claims are correct? 5. A person claims that he made a huge return on the purchase and re-sell of his house. He purchased his house for $100,000 in 1980. In 2005, he sold the house for $180,000. If the CPI was 90 in 1980 and equaled 180 in 2005, what is the value of the $180,000 payment received in 2005 measured in 1980 dollars? Why might you question this person's claim? 6. Explain why real wages are better indicators of how workers are doing than are their nominal wages. 7. Explain why borrowers during the 1970's did very well even though interest rates exceeded 15% in some cases. 8. An inflation rate of 2% a year tells us what about the consumer price index? 4. Social security benefits increased much more in the 1970's (when inflation was high) than they did in the 1990's. Suppose someone claimed that this shows that social security recipients fared much better during the 1970's than they did during the 1990's because their social security benefits were rising at faster rates. What do you need to know to determine if such claims are correct? 5. A person claims that he made a huge return on the purchase and re-sell of his house. He purchased his house for $100,000 in 1980. In 2005, he sold the house for $180,000. If the CPI was 90 in 1980 and equaled 180 in 2005, what is the value of the $180,000 payment received in 2005 measured in 1980 dollars? Why might you question this person's claim? 6. Explain why real wages are better indicators of how workers are doing than are their nominal wages. 7. Explain why borrowers during the 1970's did very well even though interest rates exceeded 15% in some cases. 8. An inflation rate of 2% a year tells us what about the consumer price index?