Ingrid takes a job in 1981 at a salary of $10 000. By 2010, she has been promoted, with a salary of $50 000. If the price index in 1981 is 50, and the price index in 2010 is 180, what is Ingrid's 2010 salary in 1981 dollars?

Question

Quizplus · Accepted Answer

We need to adjust Ingrid's 2010 salary to account for inflation between 1981 and 2010. To do this, we will use the ratio of the price indices:
(Price index in 2010) / (Price index in 1981) = 180/50 = 3.6
This means that prices in 2010 were 3.6 times higher than they were in 1981.
To adjust Ingrid's salary for inflation, we need to divide her 2010 salary by this ratio:
$50 000 / 3.6 ≈ $13 889
Therefore, Ingrid's 2010 salary in 1981 dollars is approximately $13 889.

Ingrid Takes a Job in 1981 at a Salary of $10