Homework Question 8 The Price is Never Right This question is designed to get you to think about doing real rather than nominal com parisons over time Consider the following In 1960 tuition at Harvard for a year was 1 520 In 1970 a retiree would earn 1 500 a year in social security benefits In 1980 the median value of a single family home sold in the United States was 66 400 In 1990 the price of a gallon of gas was 1 16 In 2000 the price of a first class stamp was 0 33 In 2010 the minimum wage in Massachusetts was 8 hour a Using FRED write down values for the CPI for June in each of the following years 1960 1970 1980 1990 2000 2010 and 2020 Use a general CPI like the one for all urban consumers to make the answers more uniform across students b For each of the 6 items mentioned above calculate the real price of that good for that year in CPI base year dollars Then calculate the real price for that good for that year in 2020 dollars c In fact in 2020 tuition at Harvard was 52 000 a retiree could expect to claim 18 000 a year in social security benefits the median value of a single family home sold in the U S was 308 000 the price of a gallon of gasoline was 2 15 the price of a first class stamp was 0 55 and the minimum wage in MA was 12 hour How do these 2020 prices compare to the real prices in 2020 dollars you calculated in c d Calculate the average annual rate of CPI inflation from i 1960 2020 ii 1970 2020 iii 1980 2020 iv 1990 2020 v 2000 2020 Fred data needed 1960 29 61 1970 38 8 1980 82 5 1990 129 9 2000 172 2 2010 217 199 2020 257 217