Question

Today, jennifer earns $55000 at her first job. her mom used to make $15,000 at her first job in 1975. jennifer is of the opinion that she makes more than her mom would have made if she started working today. her mom thinks jennifer would have earned less than she if jennifer had started working in 1975. if the cpi today is 234 and the cpi in 1975 was 82, then

Answer 1

Answer:

Jennifer's current salary would be worth more in 1975 than her mom's salary.

Explanation:

You need to calculate Real Income, which is income adjusted for inflation using the CPI from a different year. Formula:

(Current Year Salary * CPI from different year)/ (CPI from current year)

(55,000 * 82)/ (234)

4,510,000 / 234 = $19,273.50

Jennifer's current salary was worth $19,273.50 in 1975 dollars, which is more than the $15,000 her mom made.