Question

if an economists job paid $50,000 a year 10 years ago, how would understanding the present value and future value of money help explain the difference in the pay rate for the same job today?
o it would predict the future pay rate in 10 more years.
o it would guarantee a fixed pay rate increase each year.
o it would justify why the pay rate has more than doubled
o it would calculate the pay rate adjusted for economic changes.

Explanation:

Understanding present and future value of money accounts for factors like inflation, interest - rates etc. This helps in adjusting past pay rates to current economic conditions to understand the difference in pay rates over time.

Answer:

It would calculate the pay rate adjusted for economic changes.