When Joe started his job at the laundromat 5 years ago, his wage was $5.50 an hour. Today his wage is $8.50 an hour. If Joe started his job in the base year, and his real wage is the same as when he started, what is the Consumer Price Index today?
To find the Consumer Price Index (CPI) today, we need to compare the purchasing power of Joe's initial wage to his current wage. We can use the formula:
CPI = (Current wage / Initial wage) * 100
Let's calculate the CPI step by step:
Step 1: Determine Joe's initial wage in the base year.
Since Joe started his job 5 years ago in the base year, his initial wage is $5.50 an hour.
Step 2: Determine Joe's current wage.
Joe's current wage is $8.50 an hour.
Step 3: Calculate the CPI.
CPI = ($8.50 / $5.50) * 100
CPI = 154.55
Therefore, the Consumer Price Index today is approximately 154.55.