DePaul UniversityLSP 120 Assign7-CPI
Assignment 7
1. In 1950 the median family income was $3,319, while the average Major League
baseball player salary was $13,228. In 2018, the median household income was
$61,937, while the average income for Major League baseball player was $7,138,285.
a. Using the CPI.xlsx, convert each of the 1950 incomes to constant 2018 dollars and
compare the sal
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DePaul UniversityLSP 120 Assign7-CPI
Assignment 7
1. In 1950 the median family income was $3,319, while the average Major League
baseball player salary was $13,228. In 2018, the median household income was
$61,937, while the average income for Major League baseball player was $7,138,285.
a. Using the CPI.xlsx, convert each of the 1950 incomes to constant 2018 dollars and
compare the salaries of baseball players and the average household to each other and
to their actual 2018 values. Put the constant dollar values in your word document.
b. Have baseball player salaries risen faster than the salaries of the average worker?
By what percent are the actual incomes in 2018 larger than the constant dollar values
of the 1950 incomes? Show your work for both the median household and the baseball
player
c. Why do you think that, even when inflation is taken into account, the median income
of the average household has increased? Why do you think that, even when inflation is
taken into account, the average income of the baseball player has increased? In a
short paragraph, speculate on the economic and cultural changes that have occurred
from 1950 to 2018 that might help account for these changes. [Hint: The correct answer
is NOT "inflation" or "the economy."]
2. Open the file DePaul_Tuition_Most_Recent.xlsx. This file contains the DePaul
tuition from 1970 to 2019. Take a look at the data. Note the asterisks on some of the
figures.
a. Using CPI.xlsx Calculate the tuition in constant 2019 dollars. Then make an XY
scatter graph of DePaul tuition in constant dollars and paste it into your document.
b. If the price of an item increases at the same rate as inflation, what would the constant
dollar graph for that item look like? During which years did DePaul tuition increase at
approximately the same rate as inflation?
c. What does the graph of DePaul tuition in constant 2019 dollars tell you about tuition
increases over the years? Is DePaul tuition growing faster, slower, or at the same rate
as inflation?
d. Why do you think DePaul's tuition has grown the way it has? Do you think the tuition
growth at DePaul is similar to the tuition growth at other universities? What factors may
be affecting the cost of higher education? Give your answer in the form of a well written
paragraph.
3. The annual inflation rate is defined as the percentage change in the annual CPI
from the previous year to the current year. For example, the CPI in 1998 was 163.0
while the CPI in 1999 was 166.6. The inflation rate for 1999 was therefore (166.6-
163.0)/163.0 or 2.2%.
a. Open the file CPI.xlsx, which contains the annual CPI from 1912 to 2019. Add a new
column to the table that contains the inflation rate for each year. Paste the resulting
table for the years 1970-2019 into your Word document. Please do not paste the
entire table from 1912-2019 into the document; we want to focus on the years 1970-
2019
c. In a well written paragraph carefully describe the graph you made in b. Remember
to mention aspects such as increasing, decreasing, absolute and relative maximum and
minimum.
d. High inflation means that the prices of goods increases a lot and that money we
earn and have saved up in the past is worth less. Interest rates for houses, cars, and
credit cards rise if the inflation rate is high. For a variety of reasons, stock prices
tend to fall even on hints of higher inflation. According to these facts and the graph
you made above, what years were the most financially challenging? Why?
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