Ruben Earned a Salary of $60,000 in 2001 and $80,000

question 71

Multiple Choice

Ruben earned a salary of $60,000 in 2001 and $80,000 in 2006.The consumer price index was 177 in 2001 and 221.25 in 2006.Ruben's 2006 salary in 2001 dollars is

• A)$20,000;thus,Ruben's purchasing power increased between 2001 and 2006.
• B)$20,000;thus,Ruben's purchasing power decreased between 2001 and 2006.
• C)$64,000;thus,Ruben's purchasing power increased between 2001 and 2006.
• D)$64,000;thus,Ruben's purchasing power decreased between 2001 and 2006.

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Definitions:

Rents

Payments made for the use of property or land, or in economic theory, the excess returns to a factor of production over its opportunity cost.

Finite

Something that has limits or bounds; having a definite end or duration.

Profit Rate

The ratio of profits generated to the amount of capital or investment, indicative of the financial health and efficiency of an entity.

Demand And Supply

Fundamental economic concepts that describe the amount of a product or service available for sale (supply) and the desire of buyers for it (demand), influencing its price.