Answer to Question #201107 in Macroeconomics for Eugene

Question

In year 1, your anual income is p 45, 000.00, and CPI is 143.6; in year 2, your anual income is 51, 232,and the CPI is 150.7. Has your real income risen, fallen, or remained constant? Explained

Answer 1

The real income (RI) is calculated as nominal income/CPI×100%

In year 1: RI = ($45,000/143.6) × 100 = $31,337

In year 2: RI = ($51,232/150.7) × 100 = $33,996

So, my real income has risen.