Answer to Question #16027 in Macroeconomics for irina

Question #16027
Suppose you currently live and work in Cleveland, earning a salary of $60,000 per year and spending $10,000 for housing. You just heard that you will be transferred to a city in California where housing is 50 percent more expensive. In negotiating a new salary, your objective is to keep your real income constant. Your new target salary is $__________.
Expert's answer
New housing cosy = $10,000*1.5=$15,000
permanent income =
$60,000-$10,000=$50,000
New salary = $50,000+15,000=65,000

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