Given the following figures,by approximately what percentage did Mike's real income increase between 2004 and 2005?
Mike's 2004 money income = $50,000
Mike's 2005 money income = $55,000
2004 CPI = 120.0
2005 CPI = 128.0
A)zero
B)3.1 percent
C)6.7 percent
D)10 percent

Question

Quizplus · Accepted Answer

To find the real income increase, adjust the nominal income for inflation using the CPI. Real income in 2004 = $50,000 / 120.0 = $416.67. Real income in 2005 = $55,000 / 128.0 = $429.69. The percentage increase in real income is (($429.69 - $416.67) / $416.67) * 100% ≈ 3.1%.

Given the Following Figures,by Approximately What Percentage Did Mike's Real