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MatroZZZ [7]
3 years ago
10

Assume in 2016 that your income was $50,000 and in 2017 your nominal income increased to $70,000. If the CPI changed from 100 to

110, then your real (purchasing power) income _______________?.
Business
1 answer:
Andrej [43]3 years ago
8 0

Answer:

$55,000

Explanation:

Data provided in the question:

Income in 2016 = $50,000

Nominal income in 2017 = $70,000

CPI in 2016 = 100

CPI in 2017 = 110

Now,

Purchasing power in 2017 = [ CPI of 2017 ÷ CPI of 2016 ] × Income in 2016

or

Purchasing power =  [ 110 ÷ 100 ] × $50,000

or

Purchasing power = 1.1 × $50,000

or

Purchasing power = $55,000

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Answer:

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