Question

1. Sam Steward is a freelance Web page designer. His yearly wages for the years 2009 through 2014 are listed below. An industry index for computer programmers that reports the rate of wage inflation in the industry is also included. This index has a base of 1998.
   

Year	Wage ($ thousands)	Index (1998 = 100)
2009	$175	148.3
2010	175	140.6
2011	150	120.9
2012	120	110.2
2013	120	105.3
2014	130	105.0

(a) Compute Sam’s real income for the period.
(b) Did his wages match the increase or decline in the industry?

Answer 1

The formula of Real Income is as follows:

Where RI = Real Income

NI = Nominal Income (Wage)

CPI = Consumer Price ( Index )

Let's make table in excel:

The formulae used on the above excel-sheet are as follows:

b) Since all the values of last column are less than the 2nd column, so we can say that his wages decline in the industry