Use the Consumer Price Index below to answer the question.The table below shows the federal hourly minimum wage in various years. What was the relative change in the minimum wage from 1990 to 1997? How does this compare to the overall rate of inflation as measured by the CPI? In which of those two years was the purchasing power of the minimum wage higher? If necessary, round values to the nearest tenth.

Question

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Answer 1

The minimum wage increased by 47.1% from 1990 to 1997. During the same period, inflation was 22.8%. In relative terms, the minimum wage increased by more than inflation so the purchasing power of the minimum wage was higher in 1997 than in 1990.