Suppose Robert has a wage contract subject to an escalator clause.He earned $22 an hour last year;in that same year,the consumer price index rose from 120.0 to 126.0.What should his new wage be?
A) $24 an hour
B) $23.10 an hour
C) $24.40 an hour
D) $22.50 an hour

Question

Quizplus · Accepted Answer

The consumer price index increased by 5% (from 120 to 126). Therefore, Robert's wage should also increase by 5%. His new wage would be $22 + (5% of $22) = $23.10 an hour.

Suppose Robert Has a Wage Contract Subject to an Escalator