Assignment 5

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# Assignment 5 - PowerPoint PPT Presentation

Assignment 5. And some incidentals. Consumer debt has soared 39% in the last five years and is now \$1.3 trillion. What was consumer debt five years ago ? What a lot of you did… 1.3trillion – (.39*1.3trillion) = \$ 0.793trillion. Three things:. 1. First you can check your answer:.

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### Assignment 5

And some incidentals

Consumer debt has soared 39% in the last five years and is now \$1.3 trillion. What was consumer debt five years ago?

What a lot of you did…

1.3trillion – (.39*1.3trillion) = \$ 0.793trillion

Three things:

You can’t decrease some value in substitute for an increase in reverse:

Example:

If I have 10 apples and they increase by 50% I then have 15 apples.

If I have 15 apples and they decrease by 50% I then have 7.5 apples.

Consumer debt has soared 39% in the last five years and is now \$1.3 trillion. What was consumer debt five years ago?

3. What’s happening in the problem?

New Value = \$1.3trillion

Reference Value = ?

% change = 39% = .39

Easier way:

x*(1+.39) = 1.3

x = .935 trillion dollars

Let’s say that consumer debt has risen 3.9% in each of the last five years. If it was at \$1.3 trillion five years ago then what is it now?

First way, as an exponential

1.3*(1+.039) =

1.3507*(1+.039) =

1.4033*(1+.039) =

1.458*(1+.039) =

1.5149*(1+.039) =

This is the same as 1.3*(1+.039)5 = 1.57 trillion dollars

Second way, as a successive percent:

(1+.039)*(1+.039)*(1+.039)*(1+.039)*(1+.039)-1 = .2108

21.08% is the overall percent change over the five years:

1.3*(1+.2108)=1.57 trillion dollars

3. There were 100 cellular telecommunications employees in the year 2000. The number of cellular telecommunications employees increased 10.4% from 2000 to 2001 and decreased 5.5% from 2001 to 2002.  What was the overall percent change in the number of employees from 2000 to 2002?  How many cellular telecommunications employees were there in 2002?

Many of you did…

100 * (1+.104) = 110.4 in 2001

110.4 * (1-.055) = 104 employees in 2002

Percent Change:

Few of you did…

(1 ± P1)*(1 ± P2) – 1 = % Change

(1 + .104)*(1 - .055) – 1 = .0433 = 4.33%

How many employees?

Suppose, hypothetically, that inflation is 3% per year and suppose that the graph of your salary in constant dollars looks like the graph below:

Is your salary in current, non-constant dollars

A. increasing

B. constant

C. decreasing

D. cannot be determined

from information given

Suppose, hypothetically, that inflation is 3% per year and suppose that the graph of your salary in constant dollars looks like the graph below:

Is your salary in current, non-constant dollars

A. increasing

B. constant

C. decreasing

D. cannot be determined

from information given.

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