MACROECONOMICS - Real income and percentage change of real income The average no

Question

MACROECONOMICS - Real income and percentage change of real income

The average nominal incomes earned in Eturia and the CPI are shown in the table below.

a. Calculate real income for each year. Enter your responses in the table above. Round your answers below to the nearest dollar.

b. By what percentage did real incomes rise in the years 2014 and 2015? Enter your responses rounded to one decimal place, in the table above. Fill in the missing blanks

2013 2014 2015   Nominal income $21,000 $24,000 $27,000   CPI 108 111 116 a. Real income $_____ $_____ $ ______ b. Percentage change of real income %______ %_______

Explanation / Answer

2013 2014 2015 Nominal income 21000 24000 27000 CPI 108 111 116 a. Real income 19444.44 21621.62 23275.86 b. Percentage change of real income 11.2 7.7 The formulas used are as follows Real Income = Nominal Income/CPI*100 % Change = ((RYn/RYn-1)-1)*100

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