The table shown displays yearly salaries and the CPI across five decades. Calculate the value of the 1999 salary in 2009 dollars. How does that salary compare to the 2009 salary shown in the table?

Question

The table shown displays yearly salaries and the CPI across five decades.  Calculate the value of the 1999 salary in 2009 dollars. How does that salary compare to the 2009 salary shown in the table?

Quizplus · Accepted Answer

To calculate the value of the 1999 salary in 2009 dollars, we need to adjust it for inflation using the CPI. The CPI for 1999 is 166.6 and the CPI for 2009 is 214.537. We can use the formula (2009 CPI/1999 CPI) * 1999 Salary to get the value of the 1999 salary in 2009 dollars. Plugging in the numbers, we get (214.537/166.6) * 40,000 = 51,748. This means that in 2009 dollars, the 1999 salary was worth $51,748. Comparing this to the 2009 salary of $50,303, we can see that the 1999 salary had a higher real value in 2009. Option A is incorrect because the value of purchasing power has increased from 1999 to 2009. Option B is incorrect because the inflation rate was higher than the increase in salary during that period. Therefore, the correct choice is C.

The Table Shown Displays Yearly Salaries and the CPI Across