Question

If you are given a 2% raise and the inflation rate is 3%, you are _____
A. seeing no change in your paycheck
B. making the same amount as before in today's dollars
C. making less than before in today's dollars
D. making more money in today's dollars

Answer 1

@mathmate

Answer 2

@22chocolate22 ?

Answer 3

Yeah?

Answer 4

You're just hovering my post, idk if you're reading it or what

Answer 5

I was trying to answer but I couldn't figure it out. Sorry.

Answer 6

Aww man. I can't figure it out either, and it doesn't talk about it anywhere in the lesson. :(

Answer 7

I think it's C?

Answer 8

I don't know, sorry.

Answer 9

No problem. I'll just have to find the answer through trial and error I guess.

Answer 10

Inflation is higher than your raise, what does that tell you?

Answer 11

If an item cost $100 before the 3% inflation, how much does it cost now?

If your paycheck was $100 before your raise, what is your paycheck now?

Answer 12

Inflation is a negative term, a raise is a positive term.

Answer 13

Inflation - 3% Raise - 2%

Answer 14

The negative is outweighing the positive by 1% which means it is a "increase or decrease?" Can you answer that for me?

Answer 15

Let's say: Inflation on $100 is 3%, so that is $103.
Raise on $100 is 2%, so that is $102.
102 - 103 = -1. Is that a decrease, or increase?

Answer 16

I think this is a trick question based on wording.

Say the old paycheque was $100.
The new paycheque is $102 in today's dollars.
Your buying power is set back by 3%, so you can only buy, on the average, 1.02*0.97=98.94% of what you \(could\) buy before.

Is $102 more money than, or less than $100?
Do you have a bigger buying power or less than before?

Answer 17

Sorry, I didn't see the replies until just now. Went to bed after posting this.

@mathmate Based on your explanation, I'd say you have less buying power than you had before by 1.06%, which would mean the answer is C? This was my answer from the getgo but I had a feeling it was a trick question too.

Answer 18

@agent0smith
Your paycheck after the raise is $102. An item that costed $100 before the inflation would cost $103 after the inflation, so by this explanation I think it's C too.

@Vuriffy C with your explanation too.

I will submit it with C as the answer and see whether I'm right or not.

Answer 19

You all had equally great answers, I will give it to Vuriffy however since he could still use some medals.

Answer 20

I suggest you verify the options

making less than before in today's dollars (not clear if it is buying power or money)
making more money in today's dollars (clearly talking about money)

So there, make the choice based of what they tell you.

Answer 21

Please don't tell me I misinterpreted everyone's explanations... that would be bad :x

I already submitted it as C. Can't check whether I'm right or not yet until it's graded.

I think it's C either way, because it's saying "today's dollars"

Answer 22

@dinorap1

Please update when you have the answer! Thanks.

Answer 23

I knew it was C, just wanted you to realize why it was C.