In: Economics
Suppose in 2016 Paula's nominal income was $55,500 and in 2019 her nominal income was $61,000. Also suppose the consumer price index in 2016 was 103 and the consumer price index in 2019 was 126. The percentage change in Paula's real income was,
a. |
22.3% |
|
b. |
11.3% |
|
c. |
9.9% |
|
d. |
–10.2% |
|
e. |
-11.3% |
Real income =(nominal income /CPI)*100
Real income in 2016=(55500/103)*100=53883.4951=53883.50
real income in 2019=(61000/126)*100=48412.6984=48412.70
%change inm real income =((real income of the year-old real income )/old real income )*100
=((48412.6984-53883.4951)/53883.4951)*100
=-10.1530101
=-10.2%
The real income changes by -10.2%
Option d