Mark Has a Two-Year Wage Contract with His Employer

question 160

Multiple Choice

Mark has a two-year wage contract with his employer.Mark's wage contract specifies a $50,000 salary for the first year,and specifies a salary increase equal to the percentage increase in the CPI during the second year.The percentage increase in the CPI during the year was 4.0 percentage points.If the CPI overstates inflation by 1.0 percentage point,at the end of the first year Mark's salary increased by ________ more than it would have without the upward bias.

• A)$50
• B)$3000
• C)$500
• D)$1500
• E)$2000

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Definitions:

Mortgage

A secured loan where property is used as collateral for borrowing money, usually for purchasing real estate.

Transfer

The act of moving assets, rights, or interests from one party to another, which can involve property, securities, or legal rights.

Short Sale

A financial transaction where an investor sells borrowed securities, anticipating a price decline to buy them back at a lower price.

Mortgage Loan

is a type of loan used to purchase or maintain a home, land, or other types of real estate where the borrower agrees to pay back the lender over a period of time, typically through monthly payments.