Question

Nate collected Social Security payments of $220 a month in Year 1. If the price index rose from 90 to 108 between Year 1 and Year 2, then his Social Security payments for Year 2 should have been

a. $228.
b. $238.
c. $257.
d. $264.

Answer 1

After calculating a 20% increase in the price index, Nate's Social Security payments should be $264 in Year 2, making option d correct.

Step-by-step explanation:

The question asks how much Nate's Social Security payments would increase if the price index rose from 90 to 108 between Year 1 and Year 2.

First, calculate the increase in the price index: (108 - 90) / 90 = 0.2 or a 20% increase. Next, apply this percentage increase to Nate's original Social Security payment:

$220 × 1.20 = $264.

Thus, Nate's Social Security payments for Year 2 should have been $264. Option d is correct.