You are pleased to see that you have been given a 4.48% raise this year. However,...
You are pleased to see that you have been given a 4.48% raise this year. However, you read on the Wall Street Journal Web site that inflation over the past year has been 1.88 %
How much better off are you in terms of real purchasing power? (Note: Be careful not to round any intermediate steps less than six decimal places.) Your real purchasing power is. (Round to two decimal places.)
Homework Answers
Real purchasing power=(1+nominal
rate)/(1+inflation)-1=(1+4.48%)/(1+1.88%)-1=2.552%
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