Suppose in the Year 2000 Ken Earned $60,000 Per Year

question 95

Multiple Choice

Suppose in the year 2000 Ken earned $60,000 per year and that in 2015 he earned $78,000 per year.If the CPI in the year 2000 was 172.2 and in 2015 was 236.7,which of the following statements is correct?

• A)​Ken's standard of living got better from 2000 to 2015.
• B)​If Ken had earned $81,000 in 2015,his standard of living would have improved relative to his income in 2000.
• C)​Ken would have needed to earn $87,000 or more in 2015 for his standard of living to have improved relative to his income in 2000.
• D)​If Ken had earned $83,000 in 2015,his standard of living would have improved relative to his income in 2000.

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Definitions:

Risk-Free Asset

An investment with a certain return and no risk of financial loss, typically represented by government securities.

Risk Level

The degree of uncertainty and/or potential financial loss inherent in an investment decision.

Treasury Bills

Short-term government securities issued at a discount from face value and mature in a year or less, representing a safe and liquid investment option.

Risky Stock

A stock that carries a high level of volatility and uncertain returns, often associated with companies in emerging or highly competitive sectors.