A worker had a nominal income of $10,000 in the year 2000, and the Consumer Price Index (CPI) for the year 2000 was 100. If there was inflation of 10 percent between 2000 and 2017 and the worker's nominal income did not change, then the real income of the worker in 2017 dollars was:
A) $9,000.90.
B) $9,050.90.
C) $9,090.90.
D) $10,000.

Question

Quizplus · Accepted Answer

The real income in 2017 can be calculated by adjusting the nominal income for the inflation rate. Since the CPI increased by 10% from 2000 to 2017, the real income in 2017 dollars would be $10,000 / (1 + 0.10) = $9,090.90.

A Worker Had a Nominal Income of $10,000 in the Year