A college graduate in 1972 found a job paying $7,200. The CPI was 0.418 in 1972.A college graduate in 2005 found a job paying $28,000. The CPI was 1.68 in 2005.The 1972 graduate's job paid in nominal terms and in realterms than the 2005 graduate's job.

Nominal terms refers to wage values not adjusted for inflation, i.e., values in current prices. So we need to compare 7,200 to 28,000, since 7,200 is less than 28,000 the first answer is less.

Real terms refers to values that have been adjusted for inflation, we can use the CPI values to adjust the salaries.

1. 1972 job in real terms: [tex]\frac{7,200}{0.418}=17,224.88[/tex]

2. 2005 job in real terms: [tex]\frac{28,000}{1.68}=16,666.67[/tex]

Now both wages are in constant or real terms and we can see that 17,224.88>16,666.67

A college graduate in 1972 found a job paying $7,200. The CPI was 0.418 in 1972.A college graduate in 2005 found a job paying $28,000. The CPI was 1.68 in 2005.The 1972 graduate's job paid ________ in nominal terms and ________ in realterms than the 2005 graduate's job.

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A college graduate in 1972 found a job paying $7,200. The CPI was 0.418 in 1972.A college graduate in 2005 found a job paying $28,000. The CPI was 1.68 in 2005.The 1972 graduate's job paid in nominal terms and in realterms than the 2005 graduate's job.