3. Drop down choices

Billy Casper = 817 / 28, 434 / 1, 425, 400 / 1, 480, 400 / 51, 517, 936

Jack Nicklaus = 1, 228 / 54, 525 / 1, 733, 912 / 1, 743, 912 / 77, 429, 698

Tom Kite = 1, 496 / 136, 006 / 1, 037, 822 / 1, 072, 822 / 94, 338 019

3. Comparing salaries from different times Consider golfers who led the Professional Golfers' Association of America (PGA) in winnings at different points in time. Note that the winnings are nominal figures (unadjusted for inflation). To convert the original earnings of Casper, Nicklaus, and Kite, use the formula for converting dollar figures from an earlier era into year 2018 U.S. dollars. Using those figures, fill in the following table, making sure to round your responses to the nearest U.S. dollar. Nominal Winnings U.S. CPI Year Golfer (Dollars) (1983 = 100) Winnings in 2018 Dollars 1968 Billy Casper 205,169 34.8 1973 Jack Nicklaus 308,362 44.4 1981 Tom Kite 375,699 90.9 2018 Tiger Woods 5,443,841 251.1 5,443,841 True or False: According to the previous table, the golfer with the highest PGA winnings in nominal dollars is not the same as the golfer with the highest PGA winnings after adjusting for inflation. True False4. Inflation and interest rates The following table shows the average nominal interest rates on six-month Treasury bills between 2004 and 2008, which determined the nominal interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 2004 to 2008. (All rates are rounded to the nearest tenth of a percent.) Nominal Interest Rate Inflation Rate Year (Percent) (Percent) 2004 1.6 2.7 2005 3.4 3.4 2006 4.8 3.2 2007 4.4 2.9 2008 1.6 3.8 Source: "FRED Economic Data," Federal Reserve Bank of St. Louis, last modified September 23, 2019, accessed September 24, 2019, https://fred.stlouisfed.org. On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 2004 to 2008. Next, use the green points (triangle symbol) to plot the real interest rates for those years. 5.0 O 4.0 Nominal Interest Rate 3.0 2.0 Real Interest Rate 1.0 INTEREST RATE (Percent) 0 1.0 2.0 .3.0 2003 2004 2005 2006 2007 2008 2009 YEAR-3.0 2003 2004 2005 2006 2007 2008 2009 YEAR According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment? 2004 2005 2006 2007 O 20085. Interest, inflation, and purchasing power Suppose Rina is a cinephile and buys only movie tickets. Rina deposits $2,000 in a bank account that pays an annual nominal interest late of 15%. Assume this interest rate is xedthat is, it won't change over time. At the time of her deposit, a movie ticket is priced at $20.00. Initially, the purchasing power of Rina's $2,000 deposit is movie tickets. For each of the annual ination rates given in the following table, rst determine the new price of a movie ticket, assuming it rises at the rate of ination. Then enter the corresponding purchasing power of Rina's deposit after one year in the rst row of the table for each ination rate. Finally, enter the value for the real interest rate at each of the given ination rates. Hint: Round your answers in the rst row down to the nearest movie ticket. For example, if you find that the deposit will cover 20.7 movie tickets, you would round the purchasing power down to 20 movie tickets under the assumption that Rina will not buy seventenths of a movie ticket. Annual Inflation Rate 0%. 15%: 189/0 Number of Tickets Rina Can Purchase after One Year V v V Real Interest Rate "A. % % When the rate of inflation is less than the interest rate on Rina's deposit, the purchasing power of her deposit 7 over the course of the year