1. (15 points total) Use the following two links to answer the following questions:

Nominal Wages (W) Price index CPI (P)^[1]

Let us go back to the 1981 - 1982 recession - review theNBER site. Note that officially, this recession began in third quarter of 1981 and ended in the fourth quarter of 1982.

1. (5 points) Calculate the real wage (W/P) the first month of the recession 7/81 and compare it to the last month of the recession 11/82. What is the percent change in the real wage during this most recent recession? Please show all work and round to two decimal places.

^[1] Hint, when deflating using a price index, we typically move the decimal two place to the left. For example, in 12/09 W = $18.80 and the price index was 217.541. The real wage is thus 18.80 divided by 2.17541.