multiple choice 1 point ruben earned a salary of $60,000 in 2001 and $80,000 in 2006. the consumer price…

multiple choice 1 point ruben earned a salary of $60,000 in 2001 and $80,000 in 2006. the consumer price index was 177 in 2001 and 221.25 in 2006. rubens 2001 salary in 2006 dollars is $75,000; thus, rubens purchasing power increased between 2001 and 2006. $75,000; thus, rubens purchasing power decreased between 2001 and 2006. $85,000; thus, rubens purchasing power increased between 2001 and 2006. $85,000; thus, rubens purchasing power decreased between 2001 and 2006.

multiple choice 1 point ruben earned a salary of $60,000 in 2001 and $80,000 in 2006. the consumer price index was 177 in 2001 and 221.25 in 2006. rubens 2001 salary in 2006 dollars is $75,000; thus, rubens purchasing power increased between 2001 and 2006. $75,000; thus, rubens purchasing power decreased between 2001 and 2006. $85,000; thus, rubens purchasing power increased between 2001 and 2006. $85,000; thus, rubens purchasing power decreased between 2001 and 2006.

Answer

Explanation:

Step1: Calculate real - salary in 2001

The formula for real - salary is $Real\ salary=\frac{Nominal\ salary}{CPI}\times100$. In 2001, nominal salary $N_1 = 60000$ and $CPI_1=177$. So, $Real\ salary_1=\frac{60000}{177}\times100\approx33898.31$.

Step2: Calculate real - salary in 2006

In 2006, nominal salary $N_2 = 80000$ and $CPI_2 = 221.25$. So, $Real\ salary_2=\frac{80000}{221.25}\times100\approx36157.38$.

Step3: Analyze the change in purchasing power

Since $Real\ salary_2>Real\ salary_1$, Ruben's purchasing power increased between 2001 and 2006.

Answer:

$75,000; thus, Ruben's purchasing power increased between 2001 and 2006.