+598 During the same 10-year period, your after-tax income rose from $30,000 to $45,000. The composite CPI at the beginning of the period was 96 and at the end of the10-year period is 114. Answers should be to nearest dollar and .01%.
a)Has the percent change in your real after-tax income from the beginning to the end of the10-year period matched the change in after-tax nominal income? (5 marks)
b)Has the change in your real income kept up with the inflation rate?
Any help would be appreaciated thanks
$40,000/$30,000=1 1/3=33% Increase over 10 years
(1 1/3)^1/10=2.9186% Increase per year in his after-tax nominal income.
CPI Index over 10 years=114/96=1.1875=18.75% Increase in CPI
(1.1875)^1/10=1.7333% Increase in CPI per year.
From the above you should be able to answer the two question posed.
$40,000/$30,000=1 1/3=33% Increase over 10 years
(1 1/3)^1/10=2.9186% Increase per year in his after-tax nominal income.
CPI Index over 10 years=114/96=1.1875=18.75% Increase in CPI
(1.1875)^1/10=1.7333% Increase in CPI per year.
From the above you should be able to answer the two question posed.
