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Ben Thomas Penns 34300 and receives a 6% raise in a year in which inflation was...

Ben Thomas Penns 34300 and receives a 6% raise in a year in which inflation was 2.5% and knowing taxes find the net gain in his purchasing power

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Answer #1

Net gain in purchasing power:

= Gain in real terms/(1+Inflation rate)

= $34,300*6%/(1+2.50%)

= $2,058/1.025

= $2,007.80

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