Suppose your income rises from €19,000 to €31,000 while the CPI rises from 122 to 169. Your standard of living has likely

Question

Quizplus · Accepted Answer

The rise in income more than compensates for the rise in CPI, indicating a likely increase in standard of living. This can be confirmed by calculating the real income, which is the nominal income adjusted for inflation. The real income in the initial year was €15,573 (19,000/122) and in the final year, it is €18,343 (31,000/169). Therefore, the real income has increased, implying an improvement in standard of living.

Suppose Your Income Rises from €19,000 to €31,000 While the CPI