FILEEach month the Current Employment Statistics (CES)

program surveys numerous businesses and government agencies in order to obtain detailed data on earnings of workers. Consider the follow ing data on the national average of hourly earnings for 2008. Also included is the corresponding consumer price index for 2008. The data set can also be found on the text website, labeled Earnings 2008.

Month Earnings CPI Month Earnings CPI January 21.25 173.3 July 21.66 183.7 February 21.29 173.9 August 21.74 181.9 March 21.43 175.8 September 21.80 182.0 April 21.43 176.5 October 21.84 177.3 May 21.52 178.8 November 21.93 172.3 June 21.60 181.5 December 21.96 169.4 Source: Bureau of Labor Statistics.

a. Use the CPI to deflate the national average o f hourly earnings.

b. Compute the percentage change in the nominal as well as real hourly earnings in 2008.

c. Were consumers getting better o ff over 2008? Explain.

Use the following information on CPI and PPI for the next three exercises.

Year CPI (1982-84 =100) PPI (1982 = 100)

2006 201.59 164.80 2007 207.34 172.70 2008 215.30 189.60 2009 214.54 172.90 Source: Bureau of Labor Statistics.