Question

Dave brags to his dad that his $45,000 starting salary as a computer programmer is much higher than his dad's $28,000 starting salary some years ago. If the consumer price index the year Dave begins work is 180.5 while the consumer price index the year his dad started work was 110.8, Dave is: a. incorrect; adjusting for quantity changes, his salary is less than his dad's salary. b. correct; adjusting for quantity changes, his salary is more than his dad's salary. c. incorrect; adjusting for price changes, his salary is less than his dad's salary. d. correct; adjusting for price changes, his salary is more than his dad's salary.

Answer 1

Answer:

correct option is c. incorrect; adjusting for price changes, his salary is less than his dad's salary

Explanation:

given data

salary computer programmer = $45,000

higher than his dad salary =  $28,000

price index = 180.5

price index = 110.8

solution

we know here Dave salary in current term = $45000

so his Dad salary in current terms: will be

Dad salary in current term = $28000\frac{180.5}{110.8}$

Dad salary in current term = $28000\frac{180.5}{110.8}$

Dad salary in current term = 45613.72

so  Dad salary in current term is 45613.72  greater than Dave

so correct option is c. incorrect; adjusting for price changes, his salary is less than his dad's salary