When Dana Roberts started her job as a librarian two years ago, her annual salary was $40,000. Although she is very good at her job and is now earning 10% more than what she started with, she notices that new hires in the same field are being offered $43,000 as an annual salary this year. Which of the following statements is most likely to be true?
A) Dana is earning less than $43,000 this year.
B) Real income for librarians in this country has increased, on an average, by $3,000 during the last two years.
C) If inflation in the current year is very high, then it is possible that Dana was better off with $40,000 two years back than the new hires are with a salary of $43,000 today.
D) Adjusted for inflation in the current year, it is likely that Dana's income this year is lower than the income of the new hires.

Question

Quizplus · Accepted Answer

Dana's salary increased by 10% to $44,000, which is more than the $43,000 offered to new hires. However, if inflation is high, the purchasing power of her current salary might be less than what it was two years ago, potentially making her worse off despite the nominal increase.

When Dana Roberts Started Her Job as a Librarian Two