Mr. Duck received a raise in 2011. How much did his real wages increase from 2010 to 2011 when the CPI was in 2011?
First, you need to find the wages for 2011, so we can compare them to the wages of 2010.
You get the number by converting the % raise into a growth factor.
Next you need to find the dollar value of Mr. Duck’s 2011 wages. Then you can use the formula for real wages.
This means that his real wages in 2011 were
Now, you can find the percentage-wise increase of his real wages by using the formula for percentage change:
Even though Donald’s wages increased by
% from 2010 to 2011, his real wages, and therefore also his purchasing power, only increased by
%. That’s not much at all!