Week 3 — Prices and Paychecks, Jobs and Job Seekers: A Short Measurement Report — Traditional alternative (no AI)

Instructors: publish this instead of the adaptive version if you prefer, and unpublish or delete the adaptive one.

Assignment 3 of the term — price the week's illustrative basket, turn its index into an inflation rate, test a raise against inflation, compute an unemployment rate, and explain to someone outside economics why a falling unemployment rate does not always mean people found jobs.

This week you learned to build the Consumer Price Index from a fixed basket, to turn an index level into an inflation rate, to tell a nominal raise from a real wage change, and to count the labor market. In Week 2 you learned that a price index equals 100 in its base year and that real and nominal values tell different stories. In this assignment you work four short problems on this week's illustrative basket and labor market, interpret each one, and explain a claim to someone who has never studied economics. This week's lecture tutorial, quiz, discussion, and Model Workshop practice the same ideas from other angles.

The task

You will use these materials, all illustrative numbers built for this course (not real data) and all from this week's chapter:

• The campus basket: 10 pizzas, 20 coffees, and 4 textbooks. It costs 200 dollars in the base year, 216 dollars in year 2, and 226.80 dollars in year 3, so the CPI is 100, then 108, then 113.4.
• A worker's 4% nominal raise in a year when prices rise 5%.
• The labor market: 200 million adults, of whom 114 million are employed and 6 million are unemployed.
• The town: 240 of a 4,800-person labor force are unemployed; then 50 of them stop looking for work, leaving 190 unemployed in a labor force of 4,750.

Work these four problems, showing your arithmetic:

1. In the illustrative campus basket, the fixed basket costs 200 dollars in the base year and 216 dollars in year 2. What is the year-2 Consumer Price Index?
2. In the same illustrative basket, the CPI is 108 in year 2 and 113.4 in year 3. What is the inflation rate, in percent, from year 2 to year 3?
3. An illustrative worker receives a 4% nominal raise in a year when the inflation rate is 5%. Using the course shortcut, about what is the change in the worker's real wage, in percent?
4. An illustrative labor market has 114 million employed and 6 million unemployed adults. What is the unemployment rate, in percent?

Beside each answer, add one brief interpretation. For problem 1, say in words what a CPI of 108 means and explain why it is not this year's inflation rate except in the first year after the base year. For problem 2, say what the rate means for prices and explain why the gap of 5.4 is not the rate. For problem 3, say what happened to the worker's buying power and why the result is approximate. For problem 4, explain why the rate divides by the labor force and not by all adults, then compute the labor-force participation rate and say what it shows.

Explain it to a non-expert

A city council member in the illustrative town has never studied economics and plans to announce: "Our unemployment rate fell from 5% to 4%, so our new job program put people to work." Write a 3–5 sentence message to the council member that recommends a more accurate way to say it, explains in everyday words how a rate can fall when people stop looking for work, suggests one other number to check, and names one limit, such as that the figures alone cannot say whether the program helped. Explain any technical term in everyday words. More than one accurate wording can be defensible, and the message does not need to judge whether the program was a good idea.

For a different, ungraded example, imagine a bakery owner who plans to tell investors: "Our sales rose 8% this year, so we baked 8% more bread." Model answer: "I'd say 'Our sales brought in 8% more dollars this year.' Sales in dollars can rise because we sold more loaves or because each loaf cost more, and economists call the dollar figure nominal for that reason. To know how much more bread we baked, we would count the loaves or adjust for our price changes. One limit: I have not checked our own prices, so I can't yet say how much of the 8% was more bread."

Use that pattern for your message to the council member, with your own recommendation and evidence.

Show your arithmetic. A reader should be able to reproduce every number you report from the values above without guessing which values or steps you used.

Deliverables

Submit a single measurement report containing:

• the four answers, each with the arithmetic shown and a brief interpretation as the task describes;
• your message to the council member, recommending a more accurate wording, explaining how a rate can fall when people stop looking, suggesting one other number to check, and naming one limit; and
• a one-line restatement of the values you used, so your results are reproducible.

Keep it to roughly one page. Clear and correct beats long.

Choose how you show it. Present your report as written text, or as a recorded audio or video explanation of about three minutes with a transcript, or as a labelled diagram that traces the basket costs to the CPI and the labor counts to both rates with a short note. Every form is graded by the same scoring criteria. Submit in any accessible file type or as a link; a recorded response may be submitted as audio or video with a transcript, or as text.

How you'll be graded

The full analytic rubric is attached to this assignment in Canvas.

Academic integrity and AI use

This version is designed to be completed without AI: do the computations, the interpretations, and the writing yourself, without any AI tool. You may use a calculator or a spreadsheet for the arithmetic. Submitting AI-generated work as your own, or copying another student's work, is an integrity violation under the course policy.

Built with The Course Maker · samples.thecoursemaker.com