Question: Answer the next four questions based on the following data using year 1 as the base year. All dollars are in billions. (a) Find real

Answer the next four questions based on the following data using year 1 as the base year. All dollars are in billions.

Year Nominal income CPI 1 2 3 4 $50,000 60,000 70,000 80,000

(a) Find real income in year 2.

(b) What was the percentage rise in prices between years 2 and 3?

(c) What was the percentage rise in prices between years 3 and 4?

(d) What was the increase in real income from year 3 to year 4 in percentage?

Year Nominal income CPI 1 2 3 4 $50,000 60,000 70,000 80,000 100 110 115 120

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