Question 4 of 14, Step 1 of 1 \( \begin{array}{l}\text { Suppose your salary in } 2015 \text { is } \$ 70,000 \text {. If the annual inflation rate is } 5 \% \text {, what salary do you need to make in } 2023 \text { in order for it to keep up with inflation? Round your } \\ \text { answer to the nearest cent, if necessary. } \\ \text { Formulas } \\ \begin{array}{l}\text { Answer } \\ \text { How to enter your answer (opens in new window) }\end{array} \\ \text { Keyboard Shortcuts }\end{array} \)

To calculate the salary needed to keep up with a 5% annual inflation rate from 2015 to 2023, you can use the formula for future value: \[ \text{Future Salary} = \text{Current Salary} \times (1 + \text{Inflation Rate})^{\text{Number of Years}} \] Here, your current salary is $70,000, the inflation rate is 0.05, and the number of years is 8 (2023 - 2015). So the future salary equals \( 70,000 \times (1 + 0.05)^8 \), which calculates to approximately \$103,091.04! Looking at the timeline, inflation has been a fluctuating beast throughout history! Since the 1980s, central banks have grappled with inflation control, often leading to pivotal changes in economic policies. The idea of adjusting salaries for inflation isn't just a practice; it helps maintain purchasing power and prevent wage stagnation, which has been a major concern in economics. For those keen on digging deeper into the topic, consider reading "The Wealth of Nations" by Adam Smith for economic principles or "Freakonomics" by Steven D. Levitt and Stephen J. Dubner for intriguing insights on the quirks of economic behavior. Both provide a fun perspective on how financial principles affect everyday life!