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Suppose You Have a Contract Specifying That Your Salary Will

Question 244

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Suppose you have a contract specifying that your salary will be increased annually with inflation,as measured by the consumer price index (CPI).Suppose the CPI rose from 110 to 121 last year.By how much would your income go up? How does accelerating inflation affect the purchasing power of your money?

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The rate of inflation is (121 - 110)/ 11...

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