Question

10.

John Wong makes $63,800 per year maintaining a self-storage business.

He was notified of a 3.3% raise in a year in which the CPI index increased
by 4.4%.

Find the gain or loss in his purchasing power.


loss of $701.80

gain of $701.80

loss of $2105.40

gain of $2105.40

Answer 1

Answer: loss of 701.80


Explanation:
Salary of John = 63,800

Raise in salary is 3.3%

New salary= (3.3%)(63800) = (3.3)(63800)/100 = 2105.4

Since, Cpi index has raise of 4.4%
So for keeping the purchasing power same, updated salary should have been (4.4%)(63800) = (4.4)(63800)/100= 2807.2

So, change in salaries is (2807.2 - 2105.4) = 701.80

He is in loss as he got raise less than the CPI index.