When Kevin started working 29 years ago, his salary was $69,920.His current salary is$165,074....

When Kevin started working 29 years ago, his salary was $69,920. His current salary is

$165,074. When Kevin started working, the price level was 120, while the current price level is

156. How much has Kevin’s salary increased in real terms over the 29 years?

State your answer to two decimal places (e.g., 3;28).

Solutions

Expert Solution

Salary of Kevin when he started working = $69,920

- When Kevin started working, the price level was 120, while the current price level is 156.

Salary of kevin now as per the price level = Initial salary*(Price level now/Price level hwne started working)

Salary of kevin now as per the price level = $69,920*(156/120)

Salary of kevin now as per the price level = $90,896

- Actual Salary of kevin Now = $165,074

Increase in Kevin's salary in real terms = Actual Salary of kevin Now - Salary of kevin now as per the price level

Increase in Kevin's salary in real terms = $165,074 - $90,896

Increase in Kevin's salary in real terms = $74,178.00

jeff jeffy answered 1 year ago

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