Re: JNU 1997-2001 Doubts

Posted by Homer Simpson on May 09, 2014; 5:40pm
URL: http://discussion-forum.276.s1.nabble.com/JNU-1997-2001-Doubts-tp7589058p7589221.html

consider this, Let mean be 2 for both and variance of x be 1 and for y be 2. this means that roughly, maximum values of x could be something like 3 and for y, it will be 2 + root 2. more dispersion means more extreme values (bigger and smaller as compared to mean)

for 8, let nominal income in period 0 = 100
              base year price index   = 100

so real income in period 0 = 100

now in period 2, nominal income = 170
                            price index = 180 (150 + 20% of 150 = 180)

so real income = (170/180)x100 = 94.4

thus, real income has fallen in period 2 as compared to period 0 by 5.56%