Question

Scott is named your new boss at work. When Scott was hired, you were making $50,000 per year. After a year, he decided to give you a 50% raise and you’re now making $75,000 per year. From your perspective, economically speaking only, explain under what type of economic circumstance would Scott be considered a very generous boss? Under what economic circumstances, from your perspective as the employee, would Scott NOT be considered a generous boss? How could you explain why Scott could NOT be considered a generous boss if he’s giving you a 50% raise?

Answer 1

Answer:

Inflation.

Under normal circumstances, a 50% raise will make Scott a generous boss.

But, if there is an annual inflation rate close 50% Scott is simply mantaining your purchase power as it should be. Even this 50% raise could be not enought to restore the original purchase power if inflation was higher than 50% Thus, employees will consider inflation rates to check how generous Scott Is.

Explanation: