Real Purchasing Power
The purpose of this assessment is to analyze a scenario based on how inflation tends to increase prices and diminishes the consumers' ability to purchase goods and services over time.
Assessment Description:
Every time a Hollywood moviemaker has a major box office success, the entertainment media compares the new film's sales against those of past movies. These media reports usually put movies such as Titanic (1997), The Dark Knight (2008), and Avatar (2009) at the top of the list.
The problem with such media comparisons is that they fail to differentiate between films' nominal and real ticket sales. When all past films' ticket sales are expressed in terms of the real purchasing power of the dollar, rankings of top-selling movies change dramatically. When sales are adjusted for the real purchasing power of the dollar, the top movies include Gone with the Wind (1939), The Sound of Music (1965), and Star Wars (1977).
Does the fact that the dollar price paid to view a typical film today is much higher than the price paid to view a movie in 1939 mean that more real purchasing power is required to see a movie today than in 1939? Explain with respect to the real purchasing power and purchasing power parity.
Submission Requirements:
Submit your response in a Microsoft Word document with the following specifications:
- Font: Arial; Point 12
- Spacing: Double
- Page length: 2 pages
Evaluation Criteria:
The Analysis assessment will be evaluated using the following criteria:
Did you use the concept of the real purchasing power and purchasing power parity to answer the question-whether more real purchasing power is required to see a movie today than in 1939?
Did you answer the question correctly and provide appropriate rationale for your answer?
Did you use macroeconomic terminologies in your analysis wherever possible?
Did your thoughts flow coherently?
Did you meet the page length requirements?
Did you adhere to Standard English grammar, spelling, and punctuation requirements?