1. 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?

2. The International Disc Jockey\'s Union has a wage contract that stipulates a yearly wage increase based on the Consumer Price Index. If this year\'s wage is $25.00, the current CPI is 180, and the contract was first signed in the base year, what was the original salary the first year of the contract?

3. Shelby bought her dream car, a 1966 red convertible Mustang, with a loan from her credit union. If Shelby paid 5.7% and the bank earned a real rate of return of 4.7%, what was the inflation rate over the life of the loan?

4. Tim is feeling magnanimous, and decides to loan his mother enough for her to pay off her credit card bills. If Tim wants to earn 3.3% and expects inflation to be 4.3%, how much will he charge his mother for the loan?


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  1. #1) (8.5 / 4) x 100 = 212.5
    #2) (100 / 150) x 25 = 16.67
    #3) 5.7-4.7 = 1
    #4) 3.3 + 4.3 = 7.6

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  2. for question 2 why divide 100/150

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