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. Jim's nominal income in 2010 was $72,500. How much was his real income if 2010
Was the base year?
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- Should people typically pay more attention to their real income or their nominal income? If you Choose the latter, why would that make sense in todays world? Would your answer he the same for the 1970s?Suppose you compare your income this year and last year and you fond that your nominal income fell but your real income rose. How could this have happened?1. Nadia’s Real income in year 2011? *$100,000$28,571$29,8$102 2. Nadia’s income become after the income increase in 2012 *$23,000$25,000$26,000It is difficult to know 3. Inflation between 2011 and 2012 is *30%24.5%25.3%21.4% 4. We can say about Nadia’s income: * Her income increased only 15%, which is different from the decrease in prices. The increase in her income is keeping up with the prices. The increase in her income is not keeping up with the prices. None of the above.
- G If your nominal income rose by 5.3 percent and the price level rose by 3.8 percent in some year, by what percentage would your real income (approximately) increase?When deciding how much of your income to save for retirement, should you consider the real or the nominal interest rate that your savings will earn? Explain, applying what you know about the difference between real and nominal from our application of GDP.The consumer price index (CPI), with a base of 1982-84, increased from 219.40 in 2010 to 257.00 in 2019. The corresponding increase in the producer price index (PPI) was from 177.80 in 2010 to 189.20 in 2019. a. Use the appropriate price index to compute John's percentage change in real income if his (nominal) income increased from $53,000 in 2010 to $69,000 in 2019. (Round your answer to 2 decimal places.) b. Use the appropriate index to compute the percentage change in real revenue of John's company if the nominal increase was from $14.2 million in 2010 to $15.8 million in 2019. (Round your answer to 2 decimal places.)
- Last year, Jane spent all of her income to purchase 200 units of corn at $5 per unit. This year, she spent all of her income to purchase 180 units of corn at $6 per unit. a)Jane's nominal income and real income decreased this year. b)Jane's nominal income decreased this year, but her real income increased. c)Jane's nominal income and real income increased this year. d)Jane's nominal income increased this year, but her real income decreased.Using the table below, find the real value of a payment of $1,000 to be received each year given the following CPI values. Next find the amount that this $1,000 should be adjusted to in order to keep its real value at $1,000. Instructions: Round your answers to two decimal places. Year CPI 2015 100 2016 103 2017 105 2018 110 Real value of $1,000 1,000 Cost-of-living adjusted payment 1,000Assume that in 1974, interest rates were 7.443% and the rate of inflation was 12.065%. What was the real interest rate in 1974? How would the purchasing power of your savings have changed over the year? The real rate of interest in 1974 was %, which means that the purchasing power of your savings would have by (Round to three decimal places.) decreased increased
- Suppose that the nominal GDP in 2017 was $3,968 (in thousands) and 2018 is the base year. Nowthe nominal GDP for years 2018 and 2019 will be the sum of the nominal GDP of the previousyear and the cost-of-living adjustment (COLA.) for the current year. [COLAs per year are equalto the percentage increase of the rate of inflation.] When we calculate the nominal GDP this way,what is this economy’s real GDP each year?You deposit $2,000 in a savings account, and a yearlater you have $2,100. Meanwhile, the CPI risesfrom 200 to 204. In this case, the nominal interestrate is _________ percent, and the real interest rateis _________ percent.a. 1; 5b. 3; 5c. 5; 1d. 5; 3I don’t understand how they got this answer. I thought the equation for real income was: Nominal income divided by CPI (in hundredths) For example: 30,000/1.0= a real income of $30,000.
