Question

Jack accepted a job last year paying $50,000 per year. He just received a raise to $55,000 per year. Between last year and this year, consumer prices have increased a total of 10%. We can safely say that:

Bill's real income has fallen.

Bill's real income has risen.

Bill's real income has stayed constant.

We don't have enough information to draw any conclusion about Bill's real income.

Answer 1

Answer

Option 3

Bill's real income has stayed constant.

change in amount =((amount of the year -last year amount )/last year amount )*100

change in salary =((55000-50000)/50000)*100

=10%

change in real income =change in salary -change in prices=10-10=0

the change in salary and prices is the same so the real income is constant