Fatima is going to ask for a raise. Over the past year, the CPI has gone from 119.6 to 122.6. Fatima now earns $45,000. What is the minimum raise that Fatima should ask for in order to maintain the same buying power?

Question

Quizplus · Accepted Answer

To maintain the same buying power, Fatima's raise should match the increase in the CPI. The CPI has increased by 2.5% (122.6 - 119.6 / 119.6 * 100). To maintain her buying power, Fatima should ask for a raise of 2.5% of her current salary, which is $45,000 * 0.025 = $1,125. Her new salary should be $45,000 + $1,125 = $46,125.

Fatima Is Going to Ask for a Raise