Jim earned a salary of $60,000 in 2002 and $80,000 in 2007. The consumer price index...

Jim earned a salary of $60,000 in 2002 and $80,000 in 2007. The consumer price index was 177 in 2002 and 221.25 in 2007. Jim's 2002 salary in 2007 dollars is

A. $85,000; thus, Jim's purchasing power decreased between 2002 and 2007.

B. $85,000; thus, Jim's purchasing power increased between 2002 and 2007.

C. $75,000; thus, Jim's purchasing power increased between 2002 and 2007.

D. $75,000; thus, Jim's purchasing power decreased between 2002 and 2007.

Assume an economy experienced a positive rate of inflation between 2004 and 2005 and again between 2005 and 2006. However, the inflation rate was lower between 2005 and 2006 than it was between 2004 and 2005. Which of the following scenarios is consistent with this assumption?

A. The CPI was 100 in 2004, 105 in 2005, and 130 in 2006.

B. The CPI was 100 in 2004, 110 in 2005, and 105 in 2006.

C. The CPI was 100 in 2004, 90 in 2005, and 88 in 2006.

D. The CPI was 100 in 2004, 120 in 2005, and 135 in 2006.

Expert Solution

Rahul Sunny answered 1 year ago

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