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b) What all 2016! - 7. (LO 1, the quest 2015: c) Calculate the annual inflation rate. 2016: - - 2017: d) Calculate the percen

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Answer #1

a) Real income = (Nominal income / CPI) * 100

Real income in 2015 = (28000 / 116) * 100 = 24,137.93

Real income in 2016 = (29600 / 121) * 100 = 24,462.81

Real income in 2017 = (32000 / 128) * 100 = 25,000

b) Increase in real income in 2016

= [(24,462.81 - 24,137.93) / 24,137.93] * 100

= 1.34%

Increase in real income in 2017

= [(25,000 - 24,462.81) / 24,462.81] * 100

= 2.20%

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