Question

At the time of Kelsey’s 20 year high school reunion she was earning $50,000 and the CPI was 120. Now that it is time for her to attend her 30 year high school reunion, Kelsey’s income has risen to $97,000 and the CPI is 230. At her 30 year reunion, can Kelsey rightfully brag that her real income has risen since the last time she saw her former classmates ten years ago?

Answer 1

The correct answer is Real income Rise since last time.

Step-by-step explanation:

According to the scenario, the given data are as follows:

At 20 year reunion

Earning = $50,000

CPI = 120

At 30 year reunion

Earning = $97,000

CPI = 230

So, Change in CPI Percentage = [(230 - 120) ÷ 120] × 100

= [110 ÷ 120] × 100

= 0.9167 or 91.67%

Now Change in earning percentage = [($97,000 - $50,000) ÷ $50,000] × 100

= [$47,000 ÷ $50,000] × 100

= 0.94 or 94.00%

As, Change in earning percentage > Change in CPI Percentage

Hence, it shows that the real income has risen since the last the.