Question 3

On May 22, 2013,Forbesmagazine reported that Bill Gates had overtaken Mex- ican businessman Carlos Slim as the "richest man in the world." Gates's fortune

on that date was estimated at $70 billion, whereas Slim's was a mere $69.86 billion. (http://www.forbes.com/sites/erincarlyle/2013/05/22/bill-gates-is-worlds-richest-bumps- slim/)

Does this make Gates the richest American who ever lived?

John D. Rockefeller, the founder of Standard Oil, is usually credited with this distinction. At the time of his death in 1937, the founder of the Standard Oil empire had an estimated net worth of $1.4 billion.

1. a)GototheUSBureauofLaborStatistics(BLS)CPIsiteathttp://data.bls.gov/cgi- bin/surveymost?cu. Under "Consumer Price Index-All Urban Consumers," se- lect "US All Items, 1982-84=100" and click the "Retrieve data" button at the bottom of the page. Adjust the years to retrieve data from 1937 through 2013. Use the data under the "Annual" column to calculate Gates's 2013 net worth measured in 1937 dollars. How does Gates's wealth compare to Rockefeller's in real terms? (4 points)
2. b)Some analysts say that Rockefeller's net worth was economically equivalent to approximately$billion today. Thisfigure is arrived at in a particular way. First, his net worth in 1937 is calculated as a percentage of total U.S. GDP in 1937. That percentage is then multiplied by the current level of GDP to arrive at the equivalentfigure in current dollars. You canfind the relevant GDPfigures at http://research.stlouisfed.org/fred2/data/GDPA.txt. Compute. (Show your calculations.) (5 points)
3. c)What are the pros and cons of the two different methods-used in (a) and (b)-of adjusting Rockefeller's net worth to make it comparable to the wealth of individuals today? Discuss. (6 points)

Hey for question 3c) I'm not sure what's the method used in a) and b) but I think a uses CPI to calculate inflation and b) uses nominal GDP is it correct method ? or is it real gdp for method b) ?