The following table provides data on the average starting salary offered to new

Question

The following table provides data on the average starting salary offered to new college graduates with a degree in information systems and the Consumer Price Index (CPI) from 2005 to 2009. Compute and select the equivalent salary in 2005 dollars for each of the five years listed in the table using the dropdown menus provided. CPI (1982-84 base) 195.3 201.6 207.3 215.3 214.5 Equivalent Salary (2005 dollars) Graduation Year 2005 2006 2007 2008 2009 Salary Offer ($) 43,653 45,391 47,507 51,489 50,573 (Sources: Salary offers: National Association of Colleges and Employers [NACE], Salary Survey, various issues; CPI: Bureau of Labor Statistics [BLS]) The cohort of information systems majors who graduated in jobs fared the best in the market for their first 2005 2009 2008 2006 2007 Flash Player MAC 27,0,0,130 Q3 3.34.1 © 2004-2016 Aplia. All rights reserved. © 2013 Cengage Learning except as noted. AS rights reserved Grade It Now Save & Continue Continue without saving

Explanation / Answer

The equivalent salary for each year is computed by multiplying the salary in that year with the CPI of 2005 and dividing by the CPI of that year. Therefore we get the equivalent salaries as:

Therefore from the above table we can conclude that:

The cohort of information systems who graduated in 2008 fared the best in the market for their first jobs.

Year Salary Offer CPI Equivalent Salary 2005 43,653 195.3 43,653 2006 45,391 201.6 45,391*(195.3/201.6) = 43972.53 2007 47,507 207.3 47,507*(195.3/207.3) = 44756.96 2008 51,489 215.3 51,489*(195.3/215.3) = 46706 2009 50,573 214.5 50,573*(195.3/214.5) = 46046.19

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