Bentley's income was $48,000 in year 1 and $52,600 in year 2.The CPI was 120.3 in year 1 and 125.4 in year 2.What was the approximate percentage change in Bentley's real income between the two years?
A) 5.7 percent
B) 3.5 percent
C) 5.1 percent
D) 9.6 percent
E) 8.3 percent

Question

Quizplus · Accepted Answer

To calculate real income, we need to adjust for inflation using the CPI.

Real Income in Year 1 = $48,000/120.3 = $398.71
Real Income in Year 2 = $52,600/125.4 = $419.27

Percentage Change in Real Income = [(New Value - Old Value)/Old Value] x 100%
= [(419.27 - 398.71)/398.71] x 100%
= 5.1%

Therefore, the approximate percentage change in Bentley's real income between the two years is 5.1 percent (option C).

Bentley's Income Was $48,000 in Year 1 and $52,600 in Year