In year 1 the CPI is 175,and in year 2 the CPI is 189.If Dennis's salary was $82,000 in year 1,what is the minimum salary he must earn in year 2 to "keep up with inflation"?
A) $83,550
B) $92,360
C) $85,750
D) $88,560

Question

Quizplus · Accepted Answer

To keep up with inflation, Dennis's salary should increase by the same percentage as the CPI. The CPI increased from 175 to 189, which is an increase of (189-175)/175 = 0.08 or 8%. Therefore, Dennis's salary should also increase by 8%. His new salary should be $82,000 * 1.08 = $88,560.

In Year 1 the CPI Is 175,and in Year 2