Question

Suppose the median disposable income measured in current rupees is 10000 and 20000 for 1978 and 1988 respectively. The economy’s price index is 100 in the base year of 1978 and 250 in 1998. Which of the following is true? a) Nominal median disposable income rose 50% over the period b) Real median disposable income rose 250% over the period c) Real median disposable income fell 50% over the period d) The Rs.10000 in 1978, measured in 1988 rupees, is equivalent to Rs.25000​

Answer 1

Answer:

Suppose that median disposable income measured

in current dollars is $10,000 and $20,000 for 1978

and 1988, respectively. The economy's price

index is 100 in the base year of 1978 and 250 in

1988. Which of the following is true?

(A) Inflation, as measured by the price index, rose

250 percent over the period.

(B) Nominal median disposable income rose 50

percent over the period.

(C) Real median disposable income rose 250

percent over the period.

(D) Real median disposable income fell 50 percent

over the period.

(E) The $10,000 in 1978, measured in 1988

dollars, is equivalent to $25,000