Question

Janelle earned a salary of $40,000 in 1996 and $65,000 in 2006. The consumer prive index was 160 in 1996 and 266 in 2006. Janelle's 1996 salary in 2006 dollars is
A. $24,060.15
B. $42,400
C. $43,655.17
D. $66,500

Answer 1

The correct answer is (D) : $66,500.

Janelle earned a salary of $40,000 in 1996 and CPI in 1996 is 160

In order to calculate Janelle's 1996 salary in 2006 dollars we have to equate real 1996 salary in Year 1996 and Year 2006.

Janelle earned a salary of $40,000 in 1996 is 160

Formula : Real Salary = Amount of Salary / CPI

=> Real Salary in 1996 = 40,000 / 160

Let Her salary is 2006 dollars be X

=> Her 1996 real salary in 2006 = X/266

Now equation these real salary we get

40,000 / 160 = X/266

=> X = $66500

So, Her 1996 salary is 2006 dollars $66500

Hence, the correct answer is (D) $66,500

To know more about consumer price index, visit:

https://brainly.com/question/27886596

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