When Terry retired from Caterpillar, he received a pension: Caterpillar would pay him $50,000 the first year he was retired, with the amount increasing by 5 percent each year thereafter. If inflation turned out to be 2 percent each year, what would happen to the real value of Terry's pension? A. It would decrease each year by 5 percent. B. It would increase each year by 3 percent. C. It would increase each year by 5 percent. D. It would decrease each year by 3 percent.
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Ответ:
B. It would increase each year by 3 percent.
Explanation:
Given
Pension = $50,000 in first year
Increment = 5%
Inflation = 2%
Inflation doesn't only affect the value of an investment, it also influence the liabilities of a pension fund.
Consider a pension plan which gives a worker a benefit based on final average salary; A slight increase in the inflation would reduce the worker's real benefits in the years after retirement.
So, instead of Terry's pension to increase by 5% each year,
It'll increase by 3%
This is calculated by subtracting the inflation rate from the real increment rate.
5% - 2% = 3%
Ответ:
The amount of money spent on NASA is much less than the amount of money
spent on the Department of Defense, + The U.S. Department of Defense is the strongest in the world, as it uses funds that should actually be used by NASA.
Explanation:
The author shows a strong feeling toward the lack of funding towards NASA because they mentioned the ¨unfortunate¨ situations American astronauts are going through. This makes me believe that their opinion is based on funding NASA more than the U.S. Department of Defense.