Question

Today, Jennifer earns $50000 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 if Jennifer had started working in 1975. If the CPI today is 237 and the CPI in 1975 was 82, then Choose one or more: A. Jennifer’s mom is wrong. Jennifer’s salary in 1975 dollars would have been $17300. B. Jennifer is wrong. Her mom’s salary in today’s dollars would be $5190. C. Jennifer’s mom is correct. Jennifer’s salary in 1975 dollars would have been $144512. D. Jennifer is correct. Her mom’s salary in today’s dollars would be $43354.

Answer 1

A. Jennifer’s mom is wrong. Jennifer’s salary in 1975 dollars would have been $17300.

D. Jennifer is correct. Her mom’s salary in today’s dollars would be $43354.

Step-by-step explanation:

If Jennifer had started working in 1975, so the salary in 1975 would equal to

= First job salary × (CPI in 1975 ÷ CPI today)

= $50,000 × (82 ÷ 237)

= $17,299.58

If Jennifer had started working today, so the salary today would equal to

= First job salary in 1975 × (CPI today ÷ CPI in 1975)

= $15,000 × (237 ÷ 82)

= $43,353.65