Question

Assume that Ms. Sawyer's salary is $42,000, up from $40,000 last year, while the CPI is 157.5 this year, up from 150 last year. This means that Ms. Sawyer's real income has

Answer 1

Answer: stayed the same

Explanation:

The Consumer Price Index (CPI) simply measure average change in price over time based on the prices that were paid for goods and services.

If Ms. Sawyer's salary is $42,000, up from $40,000 last year, while the CPI is 157.5 this year, up from 150 last year. This means that Ms. Sawyer's real income has stayed thesame. This is because:

$42,000/157.5 = 266.67

$40,000/150 = 266.67

Since we both got thesame answers, Sawyer's real income is thesame.