The Table Shown Displays Yearly Salaries and the CPI Across

question 65

Multiple Choice

The table shown displays yearly salaries and the CPI across five decades. If the 1989 salary in 2009 dollars is $147,951, how do we interpret this finding?

• A) A person with a salary of $85,539 in 1989 could have purchased the same amount of goods as someone earning $147,951 in 2009 could have bought.
• B) It would take $147,951 in 2009 to buy the same amount of goods that someone purchased in 1989 with $85,529.
• C) A person earning $85,529 in 1989 would have been as well off as a person earning $147,951 in 2009.
• D) All of these interpretations are correct.

---

Definitions:

Depreciation

The methodical distribution of the expense of a physical asset across its lifespan.

Plant Assets

Tangible assets used in a company's operations that have a useful life of more than one year.

Notes Payable

A written agreement to pay a specified amount, usually including interest, by a certain date.

Direct Method

A way of preparing a cash flow statement where actual cash flows from operating activities are listed directly.