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A Union worker is to see an increase in pay of 2.5% per year next year. Her salary is $41,000/yr. If inflation was predicted to be 1.9% for the upcoming year, how much more purchasing power would she have in dollars next year?

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Answer:

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Step-by-step explanation:

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She'll have $246 more purchasing power.

Current salary per year = $41000

Next year salary = $41000 × (2.5% × $41000)

= $41000 + (0.025 × $41000)

= $41000 + $1025

= $42025

Effect of Inflation will be:

= $41000 + (1.9% × $41000)

= $41000 + (0.019 × $41000)

= $41000 + $779

= $41779

Therefore, the difference will be:

= $42025 - $41779

= $246

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