« previous next »

Author Question: Suppose the Social Security Administration would like to guarantee the purchasing power of social ... (Read 71 times)

NguyenJ

  • Hero Member
  • *****
  • Posts: 516
on: Jul 1, 2018
Suppose the Social Security Administration would like to guarantee the purchasing power of social security payments to the elderly does not diminish.
 
  That is, the real value of the payments does not decrease. The CPI in 1990 was 130.7 and the CPI in 1998 was 163.0. How much does the Social Security Administration need to increase payments from 1990 to 1998 to accomplish this objective?

Question 2

An investment opportunity has two possible outcomes, and the value of the investment opportunity is 250. One outcome yields a 100 payoff and has a probability of 0.25. What is the probability of the other outcome?
 
  A) 0
  B) 0.25
  C) 0.5
  D) 0.75
  E) 1.0


carolinefletcherr

  • Sr. Member
  • ****
  • Posts: 313
Reply #1 on: Jul 1, 2018
Answer to Question 1

The change in the general price level is 100(163-130.7)/130.7 = 25. Thus, the level of payments in 1998 need to be P(1990)(1+0.25).

Answer to Question 2

D


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Malaria was not eliminated in the United States until 1951. The term eliminated means that no new cases arise in a country for 3 years.

Did you know?

The top five reasons that children stay home from school are as follows: colds, stomach flu (gastroenteritis), ear infection (otitis media), pink eye (conjunctivitis), and sore throat.

Did you know?

When blood is deoxygenated and flowing back to the heart through the veins, it is dark reddish-blue in color. Blood in the arteries that is oxygenated and flowing out to the body is bright red. Whereas arterial blood comes out in spurts, venous blood flows.

Did you know?

Drug abusers experience the following scenario: The pleasure given by their drug (or drugs) of choice is so strong that it is difficult to eradicate even after years of staying away from the substances involved. Certain triggers may cause a drug abuser to relapse. Research shows that long-term drug abuse results in significant changes in brain function that persist long after an individual stops using drugs. It is most important to realize that the same is true of not just illegal substances but alcohol and tobacco as well.

Did you know?

As many as 28% of hospitalized patients requiring mechanical ventilators to help them breathe (for more than 48 hours) will develop ventilator-associated pneumonia. Current therapy involves intravenous antibiotics, but new antibiotics that can be inhaled (and more directly treat the infection) are being developed.

Upsetting the entire social order, the French Revolution removed the past as a sure guide to the ... Upsetting the entire social order, the French Revolution removed the past as a sure guide to the ...
Drug Forms and Routes of Administration Drug Forms and Routes of Administration
Upward social mobility, though welcome, can place people in a world so different from their world of ... Upward social mobility, though welcome, can place people in a world so different from their world of ...
Social Psychologist Social Psychologist
Suppose a country imports televisions. The country's supply and demand curves are shown in ... Suppose a country imports televisions. The country's supply and demand curves are shown in ...
Fire power Mario Fire power Mario
Video: Digestive chemicals - types & enzymes

For a complete list of videos, visit our video library