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@ -129,12 +129,12 @@ The Federal Reserve Economic Data (FRED) database is one of the best sources for
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\begin{align*}
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\text{Real GDP per capita growth} &= \frac{\text{Real GDP per capita in 2023} - \text{Real GDP per capita in 1947}}{\text{Real GDP per capita in 1947}} \\
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\text{Real GDP per capita growth} &= \frac{67,483 - 15,248}{15,248} \times 100 = 342.6\%
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\text{Real GDP per capita growth} &= \frac{67,483 - 15,248}{15,248} \times 100 = \textbf{342.6\%}
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\end{align*}
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\begin{align*}
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\text{Real GDP per capita fall} &= \frac{\text{Real GDP per capita in 2020 Q2} - \text{Real GDP per capita in 2020 Q1}}{\text{Real GDP per capita in 2020 Q1}} \\
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\text{Real GDP per capita fall} &= \frac{57,383 - 62,333}{62,333} \times 100 = -7.9\%
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\text{Real GDP per capita fall} &= \frac{57,383 - 62,333}{62,333} \times 100 = \textbf{-7.9\%}
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\end{align*}
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\item Find the unemployment rate data series on FRED. What is the highest recorded unemployment rate in U.S. history, and when
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\item Using 2016 as the base year, what is the CPI in 2020?
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\begin{align*}
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\text{CPI} = \frac{\text{Cost of Basket in 2020}}{\text{Cost of Basket in 2016}} \times 100 = \frac{70 + 9 \times 80}{60 + 7 \times 80} \times 100 = 147.42
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\text{CPI} = \frac{\text{Cost of Basket in 2020}}{\text{Cost of Basket in 2016}} \times 100 = \frac{70 + 9 \times 80}{60 + 7 \times 80} \times 100 = \textbf{147.42}
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\end{align*}
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\item Calculate inflation between 2016 and 2020
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\begin{align*}
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\text{Inflation} = \frac{\text{CPI in 2020} - \text{CPI in 2016}}{\text{CPI in 2016}} \times 100 = \frac{147.42 - 100}{100} \times 100 = 47.42\%
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\text{Inflation} = \frac{\text{CPI in 2020} - \text{CPI in 2016}}{\text{CPI in 2016}} \times 100 = \frac{147.42 - 100}{100} \times 100 = \textbf{47.42\%}
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\end{align*}
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\item If you were making \$10/hr in 2016, how much would you have to make in 2020 for your purchasing power to remain constant, given our inflation estimate?
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\begin{align*}
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\text{New Wage} = \text{Old Wage} \times \left(1 + \frac{\text{Inflation}}{100}\right) = 10 \times \left(1 + \frac{47.42}{100}\right) = 14.74
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\text{New Wage} = \text{Old Wage} \times \left(1 + \frac{\text{Inflation}}{100}\right) = 10 \times \left(1 + \frac{47.42}{100}\right) = \textbf{\$14.74}\text{/hr}
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\end{align*}
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\item \textbf{(2 Points)} If we wanted to calculate inflation accurately, what are some shortcomings of using the CPI that we constructed in this problem?
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