Marcoeconomics HW Question? Need Help?

Question

Suppose “Tim” makes $890,000 dollars this year but the CPI registers at 1.10. What is his real purchasing power? What process would go into figuring this question out?

Answer 1

at 1 his purchasing power would be $890,000

at 2 his purchasing power would be $445,00

at 1.1 his purchasing power would be $890,000-$89,000=$801,000 (89,000 is 10% of 890,000)

$801,000