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So 60k-50k/50k x 100= 20%. Your nominal income is 60K. But what if prices went up by 10%? Real I year2= Nominal I (60k)/CPI (up 10% so 110) x 100= A real income of $54,545.45. Conclusion: so why does inflation matter? One reason is the effect it has on your ability to purchase goods and services. Imagine at the national macroeconomic level. ................
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