Given the following figures,by approximately what percentage did Jeff's real income increase between 2004 and 2005?
Jeff's 2004 money income = $60,000
Jeff's 2005 money income = $72,000
2004 CPI = 120.0
2005 CPI = 128.0
A)zero
B)6.7 percent
C)12.5 percent
D)20 percent

Question

Quizplus · Accepted Answer

To calculate the percentage increase in Jeff's real income, we need to adjust his nominal income for the change in inflation from 2004 to 2005 using the CPI. The formula to do this is: 
Real income = (Nominal income / CPI) * 100

So for Jeff in 2004: 
Real income = ($60,000 / 120) * 100 = $50,000

And for Jeff in 2005: 
Real income = ($72,000 / 128) * 100 = $56,250

To find the percentage increase, we can calculate the difference in real income from 2004 to 2005, and then divide by the initial real income: 
Percentage increase = [(New real income - Old real income) / Old real income] * 100

Percentage increase = [(56,250 - 50,000) / 50,000] * 100 = 12.5%

Therefore, Jeff's real income increased by approximately 12.5% from 2004 to 2005.

Given the Following Figures,by Approximately What Percentage Did Jeff's Real