Question

Today, Jennifer earns $45000 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 itf Jennifer had started working in 1975. If the CPl today is 237 and the CPl in 1975 was 82,
A. Jennifer is correct. Her mom's salary in today's dollars would be $43354.
B. Jennifer is wrong Her mom's salary in today's dollars would be $5190
C. Jennifer's mom is wrong. Jennifer's salary in 1975 dollars would have been $15570.
D. Jennifer's mom is correct. Jennifer's salary in 1975 dollars would have been $130061.

Answer 1

Answer:

Option A and option C are correct

Explanation:

Data provided in the question:

Jennifer's current earning = $45,000

Jennifer's mom earning in 1975 = $15,000

Current CPI = 237

CPI in 1975 = 82

Now,

Worth of Jennifer's mom salary today = $\frac{\textup{Current CPI}}{\textup{CPI in 1975}}\times\textup{Jennifer's mom earning in 1975}$

or

Worth of Jennifer's mom salary today =  $\frac{\textup{237}}{\textup{82}}\times\textup{15,000}$

or

Worth of Jennifer's mom salary today = $43,353.65 ≈ $43,354

less than the Jennifer's current salary

also,

Worth of Jennifer's  salary in 1975 = $\frac{\textup{CPI in 1975}}{\textup{Current CPI}}\times\textup{Jennifer's current earning}$

or

Worth of Jennifer's salary in 1975 =  $\frac{\textup{82}}{\textup{237}}\times\textup{45,000}$

or

Worth of Jennifer's salary in 1975 = $15,569.62 ≈ $15,570

more than the Jennifer's mom salary in 1975

Hence,

Option A and option C are correct