Suppose Julie's salary went from $45,000 to13.$175,000 in 12 years.a. Assuming she got the same percentage raise each of thosetwelve years, show how to calculate that rate (r%).b. Assuming that inflation was about 3% per year for those twelveyears, by what percent did Julie's "purchasing power" increase?Explain what you think "purchasing power" means.

Given, PV = $45000 FV = $175,000 n =12Inflation rate=3%

Answered: Suppose Julie's salary went from…

Suppose Julie's salary went from $45,000 to 13. $175,000 in 12 years. a. Assuming she got the same percentage raise each of those twelve years, show how to calculate that rate (r%).

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 37P: Rosalie the Retiree knows that when she retires in 16 years, her company will give her a one-time...

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Question

Suppose Julie's salary went from $45,000 to
13.
$175,000 in 12 years.
a. Assuming she got the same percentage raise each of those
twelve years, show how to calculate that rate (r%).
b. Assuming that inflation was about 3% per year for those twelve
years, by what percent did Julie's "purchasing power" increase?
Explain what you think "purchasing power" means.

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