David's income was $74,920.00 in 2014 and $76,193.64 in 2015. If the CPI was 123 in 2014 and 133.8 in 2015 with 2002 as the base year, a) Determine David's real income in 2014. $ b) Determine David's real income in 2015. $ c) Should David be happy about his increase in salary from 2014 to 2015? $ OYes, as his real income was also increased. O No, because his real income was actually decreased

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David's income was $74,920.00 in 2014 and $76,193.64 in 2015. If the CPI was 123 in 2014 and 133.8
in 2015 with 2002 as the base year,
a) Determine David's real income in 2014. $
b) Determine David's real income in 2015. S
c) Should David be happy about his increase in salary from 2014 to 2015? $
OYes, as his real income was also increased.
ONo, because his real income was actually decreased
Transcribed Image Text:David's income was $74,920.00 in 2014 and $76,193.64 in 2015. If the CPI was 123 in 2014 and 133.8 in 2015 with 2002 as the base year, a) Determine David's real income in 2014. $ b) Determine David's real income in 2015. S c) Should David be happy about his increase in salary from 2014 to 2015? $ OYes, as his real income was also increased. ONo, because his real income was actually decreased
Expert Solution
Inflation

First, we calculate the inflation till 2014 and 2015 since 2002 as follows

Inflation2014=CPI(2014)CRI(2002)=123100=1.23Inflation2015=CPI(2015)CRI(2002)=133.8100=1.338

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