Calculating Real Wage Using CPI
Melissa is choosing between two job offers. The first is in New York City with a salary of $90,000. The second is in Boise, Idaho, with a salary of $80,000. Assuming the consumer price index (CPI) is 120 in New York City and 100 in Boise, which job should Melissa choose to maximize her real wage?
A
New York City, because the real wage is $5,000 higher than in Boise.
B
The real wage in Boise is equal to the real wage in New York City, so she must use other criteria to choose.
C
Boise, because the real wage is $10,000 higher than in New York City.
D
New York City, because the real wage is $10,000 higher than in Boise.
E
Boise, because the real wage is $5,000 higher than in New York City.
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