« previous next »

Author Question: Suppose the Social Security Administration would like to guarantee the purchasing power of social ... (Read 90 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?

Dogs have been used in studies to detect various cancers in human subjects. They have been trained to sniff breath samples from humans that were collected by having them breathe into special tubes. These people included 55 lung cancer patients, 31 breast cancer patients, and 83 cancer-free patients. The dogs detected 54 of the 55 lung cancer patients as having cancer, detected 28 of the 31 breast cancer patients, and gave only three false-positive results (detecting cancer in people who didn't have it).

Did you know?

Sperm cells are so tiny that 400 to 500 million (400,000,000–500,000,000) of them fit onto 1 tsp.

Did you know?

Approximately 70% of expectant mothers report experiencing some symptoms of morning sickness during the first trimester of pregnancy.

Did you know?

Cyanide works by making the human body unable to use oxygen.

Did you know?

Adolescents often feel clumsy during puberty because during this time of development, their hands and feet grow faster than their arms and legs do. The body is therefore out of proportion. One out of five adolescents actually experiences growing pains during this period.

) Intramuscular drug administration: (d) the needle is removed and the puncture site is covered wi ) Intramuscular drug administration: (d) the needle is removed and the puncture site is covered wi
Power from the Sun Power from the Sun
In 2013, Americans learned that the federal government massively surveys their phone calls and e-mai In 2013, Americans learned that the federal government massively surveys their phone calls and e-mai
The benefits of wind power The benefits of wind power
Social and leisure organizations VS. activities by Canadians age 65 and older. Social and leisure organizations VS. activities by Canadians age 65 and older.
Fire power Mario Fire power Mario
Video: Alzheimer's Disease

For a complete list of videos, visit our video library