Question

Your net income is $22,000 per year. The inflation rate during this year is seven percent. What is your purchasing power after inflation?​

Answer 1

To calculate your purchasing power after inflation, you need to adjust your net income for the inflation rate. Here's how you can do it:

1. Calculate the inflation-adjusted income:

Inflation-adjusted income = Net income / (1 + inflation rate)

In this case:

Inflation-adjusted income = $22,000 / (1 + 0.07)

Inflation-adjusted income = $22,000 / 1.07

Inflation-adjusted income ≈ $20,560.75

2. Your purchasing power after inflation is equal to the inflation-adjusted income, which is approximately $20,560.75.

Therefore, after considering the inflation rate of seven percent, your purchasing power would be approximately $20,560.75.