Question

6. 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. Ruben's 2001 salary in 2006 dollars is 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. Ruben's 2001 salary in 2006 dollars is

Answer 1

Ruben's 2001 salary in 2006 dollars is $75,000.

Step-by-step explanation:

This can be calculated as follows:

Ruben's 2001 salary = $60,000

Consumer price index in 2001 = 177

Consumer price index in 2006 = 221.25

Therefore, wee have:

Ruben's 2001 salary in 2006 dollars = Ruben's 2001 salary * (Consumer price index in 2006 / Consumer price index in 2001) ............... (1)

Substituting the relevant valued into equation (1), we have:

Ruben's 2001 salary in 2006 dollars = $60,000 * (221.25 / 177) = $75,000

Therefore, Ruben's 2001 salary in 2006 dollars is $75,000. This indicates that Reuben's purchasing power increased between 2001 and 2006.