Question

You are pleased to see that you have been given a raise this year.​ However, you read on the Wall Street Journal Web site that inflation over the past year has been . How much better off are you in terms of real purchasing​ power?

Answer 1

Answer:

The better off could be done by 3.758741%

Explanation:

The computation is shown below:

As we know that

Nominal Rate = n  = 6.83%

Real Rate = R

Inflation = i  = 2.96%

Also,

(1 + n) = (1 + R) (1 + i)

So,

(1.0683) = 1.0296 × (1 + R)

R = 3.758741%

Hence, the better off could be done by 3.758741%

We simply applied the above formula

The same is to be considered