Jill has an escalator clause in her labor contract that gives her a raise equal to the change in the consumer price index (CPI). Last year she earned $40,000 and the CPI was 100. If the CPI this year is 110, her new salary is:
A) $40,110.
B) $50,000.
C) $40,100.
D) $44,000.

Question

Quizplus · Accepted Answer

The CPI increased from 100 to 110, which is a 10% increase. Jill's raise should match this percentage increase. Therefore, her new salary is $40,000 + (10% of $40,000) = $40,000 + $4,000 = $44,000.

Jill Has an Escalator Clause in Her Labor Contract That