1. 5.8 Changes in Wages and Consumer Prices. The fol lowing table shows for 1980 and 2004 the cost of a standard basket of consumer goods (a standard bundle of food, housing, and other goods and services) and the nominal average wage (hourly earnings) for workers in several sectors of the economy.

74 year Cost of Consumer Basket nominal Wage:

Manufacturing nominal Wage:

professional services nominal Wage:

Leisure and hospitality nominal Wage:

information 1980 2004

$ 82 189

$ 7.52 16.34

$ 7.48 17.69

$4.05 9.01

$ 9.83 21.70 Percent change from 1980 to 2004

a. Complete the table by computing the percentage changes of the cost of the basket of consumer goods and the nominal wages.

b. How do the percentage changes in nominal wages compare to the percentage change in the cost of consumer goods?

c. Which sectors experienced an increase in real wages, and which sectors experienced a decrease in real wages?