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10 June, 21:36

Ben's nominal annual income in 2009 was $40,000. If the rate of inflation is constant at 10 percent, in order to keep Ben's real income constant, his nominal income in the year 2010 should be:

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  1. 10 June, 21:42
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    nominal income in the year 2010 = $44000

    Explanation:

    given data

    nominal annual income = $40,000

    rate of inflation = 10 percent

    solution

    As here rate of inflation is 10 % that is

    = 10% of $40,000

    = 0.10 * $40,000

    = $4000

    so here his nominal income in the year 2010 will be

    nominal income in the year 2010 = $40,000 + $4000

    nominal income in the year 2010 = $44000
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