Final answer:
To maintain the same purchasing power when the CPI increases from 209 to 215, one would need to earn approximately 2.87% more than their current income. This is calculated by the formula for percentage increase in CPI and then applied to the current salary to find the necessary increase to maintain the same standard of living.
Step-by-step explanation:
If the Consumer Price Index (CPI) is currently at 209 and it is projected to rise to 215 next year, you can calculate the percentage increase in the CPI to determine how much more money you would need to earn next year to maintain the same purchasing power. The percentage increase in the CPI is calculated by taking the difference between the future CPI and the current CPI, then dividing by the current CPI, and finally multiplying by 100 to get the percentage. In this case, it would be ((215 - 209) / 209) * 100, which is approximately 2.87%.
To maintain your purchasing power, you would need to earn 2.87% more money next year. If your current salary is $50,000, for instance, you would calculate the necessary increase as 0.0287 * $50,000, which equals $1,435. Therefore, to maintain the same standard of living, you would need to earn $51,435 next year. It's important to understand that the CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. As it measures expenses related to the cost of living, it is commonly used to adjust salaries and wages to keep up with inflation.