If the consumer price index goes up by 10 percent and a consumer's income rises by 10 percent, his or her real income increases by 20 percent.

Question

Quizplus · Accepted Answer

When both the consumer price index and a consumer's income rise by 10 percent, the real income does not change because the increase in income is offset by the increase in prices, leaving the purchasing power unchanged.

If the Consumer Price Index Goes Up by 10 Percent